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City and County of San Francisco c,t y Ha " 

J J 1 Dr. Carlton B. 

Meeting Minutes Goodiettpiace 

San Francisco, CA 

Finance Committee 94102-4689 

Members: Supervisors Aaron Peskin and Chris Daly 

Clerk: GailJohnson 

Wednesday, June 05, 2002 12:30 PM City Hall, Room 263 

Regular Meeting 

Members Present: Aaron Peskin, Chris Daly, Tom Ammiano. 



Supervisor Ammiano appointed himself to serve as a member of the Finance Committee. 

MEETING CONVENED 



The meeting convened at 12:37 p.m. 
020634 [Japan Center Garage Public Parking Lease] 

Resolution approving the proposed new Japan Center Garage Public Parking Lease by and between the City 
and County of San Francisco and the City of San Francisco Japan Center Garage Corporation. (Parking and 
Traffic Department) 

4/18/02, RECEIVED AND ASSIGNED to Finance Committee. 

5/29/02, CONTINUED. Heard in Committee Speakers: Harvey Rose, Budget Analyst; Ronald Szeto, Acting Director, Parking 

Authority; Rob Eshelman, Legislative Aide to Supervisor Gonzalez; Steve Nakajo, President, Japan Center Garage Corporation; Richard 

Hashimoto, Japan Center Garage Corporation; Edward Harrington, Controller. 

Continued to 6/5/02. 

Heard in Committee. Speakers: Ronald Szeto. Acting Director, Parking Authority: Harvey Rose, Budget 
Analyst. 

Amended on page 1, line 5, and on page 2, line 6, after "Corporation, " by adding "effective July 1, 2002. " 
AMENDED. 

Resolution approving the proposed new Japan Center Garage Public Parking Lease by and between the City 
and County of San Francisco and the City of San Francisco Japan Center Garage Corporation, effective July 1, 
2002. (Parking and Traffic Department) 
RECOMMENDED AS AMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco I Primed al S:35 PM 



Finance Committee 



Meeting Minutes 



June 5, 2002 



020842 [Competitive Bid and Prevailing Wage Exemption for Job Training] 
Supervisor Maxwell 

Ordinance exempting the San Francisco Conservation Corps from the prevailing wage requirements and 

waiving the competitive bid requirements for the Recreation and Park Commission's award of a contract for 

construction of playgrounds, restoration of natural areas and implementation of erosion control measures in San 

Francisco parks. 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee. 

5/29/02, CONTINUED. Heard in Committee. Speakers: Marvin Yee, Recreation and Park Department; Harvey Rose, Budget Analyst; 

Anne Cochran, Executive Director, San Francisco Conservation Corps. 

Continued to 6/5/02 

Speakers: None. 
Continued to 6/12/02. 
CONTINUED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



020707 [Appropriating Funding for the District Attorney's Salaries and Fringes from the Reserve for Hanlon 
Arbitration Award] 
Supervisor Daly 

Ordinance appropriating 5283,764 from the Reserve for Hanlon Arbitration Award to cover salaries and 
fringes associated with the MOU with the Municipal Attorney's Association for the District Attorney's Office 
for fiscal year 2001-02. (Controller) 

(Fiscal impact.) 

5/6/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose. Budget Analyst; Teresa Serata. District Attorney's Office. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



020794 [Ellis-O'Farrell Parking Garage Bond Refinancing] 
Mayor 

Resolution approving and authorizing the issuance of City of San Francisco Ellis-O'Farrell Parking Corporation 
Parking Revenue Refunding Bonds to refund in part bonds previously issued by the City of San Francisco Ellis- 
O'Farrell Parking Corporation; approving a bond indenture modifying the maximum amount of the contingent 
reserve fund; authorizing and ratifying the execution and delivery of documents reasonably necessary for the 
issuance, sale and delivery of such refunding bonds; and ratifying previous actions taken in connection 
therewith. (Mayor) 

(Fiscal impact.) 

5/1 3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Monique Moyer, Mayor's Office of Public 
Finance; Ronald Szeto, Acting Director. Parking Authority; Mr. Pang; Anson Lee. Manager. Ellis-O'Farrell 
Parking Corporation. 

CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 



Printed at 5:35 PM on 3/2/04 



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Finance Committee 



Meeting Minutes 



June 5, 2002 



020904 [Water Rates] 

Ordinance approving revised schedule of rates to be charged by the San Francisco Public Utilities Commission 
for water service to its retail customers inside and outside the City and County of San Francisco. (Public 
Utilities Commission) 

(Submitted 5/22/02. Charter Section 2.109 requires Board of Supervisors approval or rejection within thirty 

days.) 

5/22/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; William Berry, Assistant General Manager for 
Finance and Administration, Public Utilities Commission. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



020905 [Approval of Contract Assignment and Release of Reserved Funds] 
Supervisor Peskin 

Ordinance approving the assignment of existing contract for program management and construction 
management services in support of the San Francisco Public Utilities Commission's water power and sewer 
Capital Improvement Program to a joint venture consisting of Jacobs Civil, Inc. and Primus Industries, Inc., 
and releasing reserved funds. 

(Fiscal impact.) 

5/28/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Patricia Martel. General Manager, Public Utilities Commission: David 
Novogrodsky, International Federation of Professional and Technical Engineers, Local 21. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



020834 [License Agreement with American Society of Composers, Authors and Publishers] 
Supervisor Daly 

Ordinance authorizing the Director of Administrative Services to enter into the Local Government Licensing 
Agreement negotiated between the International Municipal Lawyers' Association and the American Society of 
Composers, Authors and Publishers to license music uses by the City under an license subject to automatic 
annual renewal for an annual Base License Fee plus 1% of revenue from events in which gross revenue exceeds 
$25,000. (Administrative Services Department) 
5/20/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speaker: Christiane Hayashi. Deputy City Attorney. 
RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Absent: 1 - Daly 



City and County of San Francisco 



Printed at 5:!.^ I'M on } .' "J 



Finance Committee Meeting Minutes June 5, 2002 



020851 [Certificates of Participation to Replace the Existing San Francisco Juvenile Hall] 
Supervisor Hall 

Resolution authorizing the execution and delivery of certificates of participation to finance the acquisition, 
improvement, construction and/or reconstruction of a new juvenile detention facility to replace the existing San 
Francisco Juvenile Hall; approving the form of a property lease between the City and County of San Francisco 
(the "City") and a trustee relating to certain City-owned property (as further described in this Resolution); 
approving the form of a project lease between the City and a trustee (including certain indemnities contained 
therein); authorizing the selection of a trustee; approving the form of a trust agreement between the City and a 
trustee (including certain indemnities contained therein); approving the form of an official notice of sale and 
notice of intention to sell for the certificates of participation; approving the form of an official statement in 
preliminary and final form; approving the form of a continuing disclosure certificate; authorizing the filing of a 
validation action validating the execution and delivery of the certificates of participation; authorizing the 
reimbursement of certain expenditures; authorizing the payment of costs of issuance; adopting findings under 
the California Environmental Quality Act and findings pursuant to the City Planning Code Section 101.1; and 
ratifying previous actions taken in connection therewith. 

(Fiscal impact.) 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee. (5/30/02 - Referred to Youth Commission for comment and 

recommendation.) 

5/29/02, CONTINUED. Speakers: None. 

Continued to 6/5/02. 

Heard in Committee. Speakers: Jesse Williams, Chief Probation Officer; Monique Mover, Mayor's Office of 
Public Finance; Gregg Lowder, Director, Mayor's CriminalJustice Council; Jim Queen, African American 
Police Community Relations Board; Reverend Toni Dunbar, Chaplain, Juvenile Hall; Commissioner Kamel 
Jacot-Bell, Youth Commission; Kathleen Kelly, President, Volunteer Auxiliary, Youth Guidance Center; Ca 
Sandra Carter (volunteer at Juvenile Hall); Reverend Alan Jones, President, San Francisco Interfaith 
Council; Mr. Daniels, Juvenile Chaplaincy Committee; Supen'isor Hall; Theodore Lakey, Deputy City 
Attorney. 

Amended on page 1, line J, after "participation, " by adding "in an amount not to exceed $45,000,000. " 
AMENDED. 

Resolution authorizing the execution and delivery of certificates of participation, in an amount not to exceed 
545,000,000, to finance the acquisition, improvement, construction and/or reconstruction of a new juvenile 
detention facility to replace the existing San Francisco Juvenile Hall; approving the form of a property lease 
between the City and County of San Francisco (the "City") and a trustee relating to certain City-owned property 
(as further described in this Resolution); approving the form of a project lease between the City and a trustee 
(including certain indemnities contained therein); authorizing the selection of a trustee; approving the form of a 
trust agreement between the City and a trustee (including certain indemnities contained therein); approving the 
form of an official notice of sale and notice of intention to sell for the certificates of participation; approving 
the form of an official statement in preliminary and final form; approving the form of a continuing disclosure 
certificate; authorizing the filing of a validation action validating the execution and delivery of the certificates 
of participation; authorizing the reimbursement of certain expenditures; authorizing the payment of costs of 
issuance; adopting findings under the California Environmental Quality Act and findings pursuant to the City 
Planning Code Section 101.1; and ratifying previous actions taken in connection therewith. 

(Fiscal impact.) 

To Board for consideration on 6/24/02. 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 4 Printed at 5:35 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



June 5, 2002 



020852 [Accept-Expend Grant from Board of Corrections] 
Supervisors Hall, Leno, Nevvsom 

Resolution authorizing the Mayor's Office of Criminal Justice to accept and expend a grant in the amount of 
$15,075,000 from the Board of Corrections (BOC) for the purpose of entirely replacing San Francisco's 52 
year old juvenile hall with a modem facility that is humane and secure, while increasing its capacity to enhance 
focus on the rehabilitation of the youths detained there. 
5/20/02, RECEIVED AND ASSIGNED to Health and Human Services Committee. 

5/29/02, TRANSFERRED to Finance Committee. (5/30/02 - Referred to Youth Commission for comment and recommendation.) 
Heard in Committee. Speakers: Jesse Williams, Chief Probation Officer; Monique Moyer, Mayor's Office of 
Public Finance; Gregg Lowder, Director, Mayor's Criminal Justice Council; Jim Queen, African American 
Police Community Relations Board; Reverend Toni Dunbar, Chaplain, Juvenile Hall; Commissioner Kamel 
Jacot-Bell, Youth Commission; Kathleen Kelly, President, Volunteer Auxiliary, Youth Guidance Center; Ca 
Sandra Carter (volunteer at Juvenile Hall); Reverend Alan Jones, President, San Francisco Interfaith 
Council; Mr. Daniels, Juvenile Chaplaincy Committee; Supervisor Hall; Theodore Lakey, Deputy City 
Attorney. 

To Board for consideration on 6/24/02 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



020853 [Veterans Building General Obligation Bonds] 
Supervisors Sandoval, Daly 

Resolution determining and declaring that the public interest and necessity demand municipal improvements 
consisting of the acquisition, rehabilitation, renovation, improvement, construction and or reconstruction by the 
City and County of San Francisco of the San Francisco War Memorial Veterans Building, and all other works, 
property and structures necessary or convenient for the foregoing purposes; that the estimated cost of 
$98,100,000 for said municipal improvements is and will be too great to be paid out of the ordinary annual 
income and revenue of said City and County and will require the incurring of bonded indebtedness; finding the 
project shall comply with the Secretary of the Interior's guidelmes; finding the proposed project is in 
conformity with the priority policies of Planning Code Section 101.1(b) and with the General Plan consistency 
requirement of Administrative Code Section 2 A. 53. 

(Fiscal impact.) 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Thomas Horn, President, War Memorial Board of Trustees; Beth Murray. 

Managing Director, War Memorial Board; Mort Raphael, San Francisco Performing Arts Library and 

Museum; Sydney Goldstein, Executive Director, City Arts and Lectures; Herman Berlandt, National Poetry 

Association; Deborah Walker; Jim Haas, Chairman, Civic Pride; Tilly Abbe. Ballet With Miss Tilly; Male 

Speaker; Vince Rios; Wallace Levin, Veterans Affairs Commission; Lorna Silberman; Colonel Robert Frank. 

U.S. Air Force (Retired); Nancy Peterson, President, United Nations Association of San Francisco; Jack 

Trad; Jerome Sapiro, Jr.; Merv Silverberg; Richard Ceras; Jim Buker, Department of Public Works; Monique 
Moyer, Mayor's Office of Public Finance. 

Continued to 6/12/02. 

CONTINUED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 



Prmh-tlat 5:3i P\t 



Finance Committee 



Meeting Minutes 



June 5, 2002 



020854 [Veterans Building Lease Revenue Bonds] 
Supervisors Sandoval, Daly 

Resolution of the Board of Supervisors submitting to the qualified electors of the City and County of San 
Francisco a proposition authorizing the construction of additional improvements and renovations to the San 
Francisco War Memorial Veterans Building using lease financing; finding the proposed project is in 
conformity with the priority policies of Planning Code Section 101.1(b) and with the General Plan Consistency 
requirement of Administrative Code Section 2A.53; finding the project shall comply with the Secretary of the 
Interior's guidelines. 

(Fiscal impact.) 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Thomas Horn, President, War Memorial Board of Trustees ; Beth Murray, 

Managing Director, War Memorial Board; Mort Raphael, San Francisco Performing Arts Library and 

Museum; Sydney Goldstein, Executive Director, City Arts and Lectures; Herman Berlandt, National Poetry 

Association; Deborah Walker; Jim Haas, Chairman, Civic Pride; Tilly Abbe, Ballet With Miss Tilly; Male 

Speaker; Vince Rios; Wallace Levin, Veterans Affairs Commission; Lorna Silberman; Colonel Robert Frank, 

U.S. Air Force (Retired); Nancy Peterson, President, United Nations Association of San Francisco; Jack 

Trad; Jerome Sapiro, Jr.; Merv Silverberg; Richard Ceras; Jim Buker, Department of Public Works; Monique 

Mover, Mayor's Office of Public Finance. 

Amended on page 1, line 6, after "financing, " by adding "in the amount of $39,400,000. " 

Continued to 6/12/02. 

AMENDED. 

Resolution of the Board of Supervisors submitting to the qualified electors of the City and County of San 

Francisco a proposition authorizing the construction of additional improvements and renovations to the San 

Francisco War Memorial Veterans Building using lease financing in the amount of $39,400,000; finding the 

proposed project is in conformity with the priority policies of Planning Code Section 101.1(b) and with the 

General Plan Consistency requirement of Administrative Code Section 2A.53; finding the project shall comply 

with the Secretary of the Interior's guidelines. 

(Fiscal impact.) 

CONTINUED AS AMENDED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



020856 |Pedestrian Safety and Livable Streets General Obligation Bonds] 
Supervisors Ammiano, McGoldrick 

Resolution determining and declaring that the public interest and necessity demand the financing of street 
resurfacing, curb ramp construction, sidewalk improvement and street structure improvement projects, street 
signal and fire alarm call box improvement projects, street improvements for bicycle use and all other 
structures and improvements necessary or convenient for the foregoing purposes, that the estimated cost of 
$150,000,000 is and will be too great to be paid out of the ordinary annual income and revenue of said City and 
County and will require the incurring of a bonded indebtedness; finding the proposed project is in conformity 
with the priority policies of Planning Code Section 101.1(b) and with the General Plan consistency requirement 
of Administrative Code Section 2A.53. 

(Government Code Sections 43607 and 43608, requires eight votes for passage.) 
5/20/02, RECEIVED AND ASSIGNED to Finance Committee. 
Speakers: None. 
Continued to 6/12/02. 
CONTINUED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 



Printed at 5:36 PM on 3/2/04 



Finance Committee Meeting Minutes June 5, 2002 



020892 [Mortgage Revenue Bonds] 
Mayor 

Resolution declaring the intent of the City and County of San Francisco (the "City") to reimburse certain 
expenditures from proceeds of future indebtedness; authorizing the Director of the Mayor's Office of Housing 
(the "Director") to submit an application and related documents to the California Debt Limit Allocations 
Committee to permit the issuance of qualified mortgage bonds in an amount not to exceed $19,000,000; 
authorizing the Mayor's Office of Housing to direct the Controller's Office to hold in trust an amount not to 
exceed $95,000; authorizing the Director to certify that the City has on deposit the required amount; 
authorizing the Mayor's Office of Housing to pay an amount equal to the deposit to the State of California if the 
City fails to issue the qualified mortgage bonds; and authorizing and directing the execution of any documents 
necessary to implement this Resolution and of any documents necessary to implement this Resolution; and 
ratifying and approving any action heretofore taken in connection with the Project (as defined herein) and the 
application. (Mayor) 

5/21/02, RECEIVED AND ASSIGNED to Finance Committee. 
Speakers: None. 
Continued to 6/12/02. 
CONTINUED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



SPECIAL ORDER - 3:00 PM 



020889 [San Francisco Business Tax] 
Supervisor Peskin 

Hearing to address reform of the San Francisco Business Tax to ensure that the City's tax ordinance distributes 
tax burden among San Francisco businesses in a fair and equitable manner. This hearing is intended to assess 
the City's current tax collection in the wake of the Gross Receipts Tax Lawsuit and appropriate alternatives that 
exist to amend the tax code. 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee. Sponsor requests this item be scheduled for consideration at a Special 
Meeting of the Finance Committee on June 5, 2002 at 12:30 PM. 

Heard in Committee. Speakers: Edward Harrington, Controller: Dr. Richard Pomp: Dr. Steven Sheffrin; 
Bruce Allison; Marc Norton; Ken Cleveland, Business Owners and Managers Association; Kathleen 
Harrington, Golden Gate Restaurant Association; Male Speaker; Carl Kramer, San Francisco Living Wage 
Coalition; Robert Baezly; Margaret Brodkin, Coleman Advocates for Children; Gary Kaplan, Chair of 
Taxation Section, Bar Association of San Francisco; Debra Mugnani Monroe, Monroe Personnel Service 
LLC/Temptime; Paul Kumar, Health Care Workers Union; Robert Haaland, Harvey Milk LGBT Democratic 
Club; Rebecca Vilmerkerson, People's Budget; Supennsor McGoldrick; Eileen Griffin, Property Manager, 
Equity Office Properties; Nathan Nayman, Executive Director, Committee on Jobs; Barn Hermanson; Jim 
Mathias, San Francisco Chamber of Commerce. 
Continued to 6/12/02, as a Special Order at 2:00 p.m. 
CONTINUED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



ADJOURNMENT 



The meeting adjourned at 6:29 p.m. 



City and County of San Francisco Printed at 5:36 PM on ..' .' 04 



0-2$ 



/O^L 




[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 



CITY AND COUNTY HWSEsSlJd OF SAN FRANCISCO 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



TO: ^Finance Committee 

FROM: ^Budget Analyst 

SUBJECT: June 5, 2002 Finance Committee Meeting 
1/ 

Item 1 - File 02-0634 



May 30, 2002 

DOCUMENTS DEPT. 
JUN 5 2002 

SAN FRANCISCO 
PUBLIC LIBRARY 



Note: This item was continued for one week with a request that the Department 
provide data to the Finance Committee on transferring 20 percent of net 
revenues to the garage capital account instead of the proposed transfer of 
25 percent. 



Department: 



Item: 



Department of Parking and Traffic (DPT) 

Resolution approving a proposed new Japan Center 
Garage Public Parking Lease by and between the City 
and County of San Francisco and the City of San 
Francisco Japan Center Garage Corporation (JCGC). The 
proposed resolution would authorize the Department of 
Parking and Traffic (DPT) to enter into a new 15-year 
lease with JCGC, the existing lessee, with one 15-year 
option, retroactive to May 1, 2002, without using a 
competitive bid process. JCGC is a nonprofit corporation 
which manages the Japan Center Garage facilities located 
at 1660 Geary Boulevard. According to Section 17.11 of 
the Administrative Code, the Parking and Traffic 
Commission can lease a parking facility, without a 
competitive process, to a nonprofit corporation for the 
purpose of facilitating the financing of a parking facility, 
as authorized and approved by the Board of Supervisors. 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 



Location: 
Purpose of Lease: 
Lessor: 
Lessee: 

No. of Sq. Ft.: 



Annual Rent and Net 
Parking Revenues 
Payable By JCGC to 
the City's Off-Street 
Parkins Fund: 



Utilities and 
Janitorial Services 
Payable by Lessee 
from Parking 
Revenues: 



1610 Geary Boulevard between Fillmore and Laguna 

Management of Japan Center Parking Garage Facilities 

City and County of San Francisco 

City of San Francisco Japan Center Garage Corporation 
(JCGC), a nonprofit corporation 

The Japan Center Parking Garage facilities (Garage) 
contains 352,100 square feet and accommodates 920 
vehicles. 



$1.00 in total over the fifteen-year term of the lease; plus, 
75 percent of annual net revenues, consisting of estimated 
gross revenues of $3,000,000 less Parking Taxes of 
$586, 684 1 , less operating expenses of an estimated 
$1,500,000 2 , resulting in estimated net revenues to the 
City of $684,987 ($3,000,000 less $586,684 less 
$1,500,000, or $913,316, multiplied by 75 percent equals 
$684,987) annually based on existing parking rates. 



All costs for utilities and janitorial services would be 
approved annually by the Controller and the DPT as part 
of their approval of all operating costs under the existing 
and proposed lease and are the responsibility of the 
Lessee. 



1 Parking Taxes are 25 percent of Parking Fees and are included in posted rates, so when calculating 
Parking Taxes from Parking Fee Revenues they equal 20 percent of Parking Fee Revenues. Gross 
Revenues for the JCGC include Parking Fee Revenues, winch are subject to Parking Taxes and 
Miscellaneous Revenues, which are not subject to Parking Taxes, so the total Parking Taxes to be 
collected calculate to slightly less than 20 percent of Gross Revenues. 

2 Operating Expenses for JCGC include a 5100,000 annual contribution to the Japantown 
Community Task Force for five years (FY 2002-2003 through FY 2006-2007) as discussed in 
Description below and in Attachment II. provided bv DPT. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 

Term of Lease: The lease term is fifteen years, commencing on May 1, 

2002 or upon approval of the Board of Supervisors and 
expiring on May 1, 2017. The City can terminate the lease 
without cause at any time, upon 90 days notice. 

Right of Renewal: One option to extend the lease for an additional fifteen 

years. 

Description: The Garage is comprised of two parking structures that 

accommodate a total of 920 vehicles. According to Mr. Ron 
Szeto of DPT, the Garage is owned by the City and 
currently leased by the City to the JCGC. 

In 1999, the Board of Supervisors approved: (a) the 
dissolution of the City of San Francisco Western Addition 
Parking Corporation (WAPC), a non-profit corporation, 
which was the prior Garage lessee; (b) the transfer of the 
remaining assets and liabilities of WAPC to JCGC, a non- 
profit corporation; (c) a five year lease commencing on 
December 1, 1999 and expiring on November 30, 2004, 
with the JCGC as lessee for the Japan Center Garage; 
and (d) acceptance of a gift to the City of 5550,000 from 
WAPC for the renovation of the Peace Plaza at the 
Japanese Cultural Trade Center. According to Mr. Szeto, 
the use of a non-profit corporation facilitates lease 
revenue financing at minimal risk to the City. 

Under the current lease with JCGC, which has been in 
effect since December 1, 1999, the Japan Center Garage 
Corporation, the existing lessee, allocates 85 percent of 
the Garage's net revenues, to the City's Off-Street 
Parking Fund. Under the proposed new lease, 75 percent, 
instead of 85 percent of net revenues, would be allocated 
to the Off-Street Parking Fund. According to Mr. Szeto, 
this percentage reduction would result :r. reduced parking 
revenues of an estimated $104,372 annually to be 
allocated to the Off-Street Parkins Ir. Steven Lee 

of DPT states that the net revenue for fiscal year 2001- 
2002 for the City is estimated to be $789,359 at the 
existing 85 percent rate while under the proposed lease, 
the anticipated net revenue of allocating 75 percent of the 
Garage's net income to the Off-Si ring Fun 

be approximately $684,987 anrr' 
shown in Attachment I provided by 
BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 



Under the existing lease, 15 percent of net revenues are 
transferred to a capital account for the Garage. Under 
the proposed lease, the Japan Center Parking Corporation 
will transfer 25 percent of net revenues to this capital 
account to be used for Garage capital improvements. This 
increased percentage allocation for capital improvements 
would be derived from the corresponding reduced 
allocation to the Off-Street Parking Fund. According to 
Mr. Szeto, the increased contribution to the capital 
account, from 15 percent of net revenues to 25 percent of 
net revenues, has been proposed because under the 
current lease, the Japan Center Garage has been 
insufficiently funded for capital projects. Mr. Szeto 
further reports that at the time of the dissolution of 
WAPC and formation of JCGC, WAPC transferred 
$589,335 to JCGC for the capital account. In Attachment 
II, provided by DPT, Mr. Lee provides further details on 
Japan Center Garage capital expenditures. Under the 
existing lease, the capital fund account can have an 
accumulated balance of up to a maximum of $1 million. 
Under the proposed lease, the capital fund account can 
have an accumulated balance of up to a maximum of $2 
million. If the capital fund at any time exceeds the 
current maximum of $1 million or the proposed maximum 
of $2 million, such excess funds must be transferred to the 
City's Off-Street Parking Fund. The balance of the capital 
fund account is currently $267,219, according to Mr. Lee. 

Mr. Szeto reports that under the current and proposed 
lease terms, JCGC must obtain Parking and Traffic 
Commission authorization before expending any funds 
from the capital account. Under the terms of the proposed 
lease, the Controller and the Parking and Traffic 
Commission will continue to have review and approval 
authority for the annual budget of the Garage, including 
expenditures from the capital account. 

According to Mr. Szeto, the Japan Center Garage 
Corporation would continue to contract for operation of 
the Garage with a parking operator to be selected under a 
Bid/Request for Proposals (RFPj process in accordance 
with the lease agreement. Presently, the garage operator 
is Ampco System Parking. JCGC must emplov a 
BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 



professional parking operator with a staff experienced in 
the management and operation of public parking 
facilities. The selection of the parking operator is subject 
to approval by both the Parking and Traffic Commission 
and the Board of Supervisors in accordance with Section 
17.11 of the Administrative Code. The current parking 
operator agreement with Ampco System Parking, which 
was not previously approved by the Board of Supervisors, 
is now on a month-to-month basis. Mr. Lee reports that 
the JCGC will conduct a competitive bid/EFP process for 
a new parking operator agreement which will be subject 
to Board of Supervisors approval, pending a competitive 
process for a new parking operator agreement. 

Mr. Lee further reports that under the terms of the lease, 
JCGC would provide the Japantown Task Force, a non- 
profit corporation, with up to S100,000 annually for five 
years, from May 1, 2002 through April 30, 2007, from 
garage parking revenues to be expended for marketing for 
Japantown and also to create a long-term conceptual plan 
for community businesses. The lease which was 
previously submitted to the Board of Supervisors included 
an annual allocation of $50,000 for the Japantown Task 
Force. Mr. Lee reports that the proposed new lease would 
increase the allocation to the Japantown Task Force by 
$50,000 from $50,000 annually to $100,000 annually 
because, he states, the increased amount would be more 
appropriate to assist the Japantown Task Force to market 
the Japantown community and create a long-term 
conceptual plan for furthering community, business and 
interest. The proposed lease would require the Japantown 
Task Force to enter into a Memorandum of 
Understanding with the City requiring the Japantown 
Task Force to abide by the Sunshine Ordinance. Under 
the proposed lease, the Japantown Task Force must 
submit an annual plan and budget for the $100,000 
annual contribution, which will be included in the JCGC 
operating expenses budge: and therefore subject to 
approval of the Parking and Traffic Commission and the 
Controller. Attachment III provided by DPT, further 
describes the $100,000 annual contribution to the 
Japantown Task Force. 



BOARD OF SUP Z7. 
BUDGET ANA] 



Memo to Finance Committee 

June 5. 2002 Finance Committee Meeting 



Comments: 



1. Mr. Szeto reports that, previously, the Board of 
Supervisors requested that the DPT monitor and evaluate 
the JCGC during the current lease period and make 
recommendations to terminate or extend the lease with 
this corporation. Mr. Szeto further reports that DPT has 
found JCGC to be successful in its management of the 
Garage. According to Mr. Szeto, for this reason the DPT 
has now proposed a new lease of 15 years with JCGC even 
though the existing lease with JCGC does not expire until 
November 30, 2004. 



2. As stated above, the proposed lease term is fifteen 
years, retroactive from May 1, 2002 to 
April 30, 2017, with one option to extend the lease for an 
additional fifteen years. As previously noted, since the 
DPT already has an existing lease with the Japan Center 
Garage Corporation, there is no need to begin the 
proposed lease on May 1, which would require 
retroactivity. 



Recommendations: 



1. Amend the proposed resolution to provide that the 
lease would commence on July 1, 2002, instead of May 1, 
2002, as discussed in Comment No. 2 above. 



2. Approval of the proposed resolution, as amended, is a 
policy decision for the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

6 



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Attachment Ii 

Page 2 of 2 



llll 



ban f^anci9C3 



Attachment ill 
City and^psjjntyc^ S? n Francisco 




CEPA3TUEMT = F P4HKINQ * 73AFFIC 




WILLIE LEWIS 5SQWN. JR.. Mayor 

FRED M. HAMCUN, EXECUTIVE DIRECTOR 

SCNALD SZ5~C. ACTING DIRECTOR PARKING AUTHORITY 



MEMORANDUM 



DATE: 


May 9, 2002 




TO: 


Sarah Graham 






Budget Analyst 


'S Off: 



FROM: 



Steven Le: 
Principal Arfaiyst 
Parkin z Authority 



RE: 



Japan Center Garage Corporation Lense 



ihe purpose of the memorandum is to provide you with additional information in regard 
M the currently proposed Japan Center Garage Corporation "JCGC" Lease. 

The original proposed Lease was rejected in December due to concerns thsu the Board of 
Supervisors had regarding the S50.000 per year, for the next five years, allocation to ihe 
Japantown Task Force for community outreach/participation and marketing in terms of 
the process in which the Japantown Task Force would receive the funds and the specific 
use of these funds. The Board of Supervisors also wanted the Japantown Task Force to 
abide by the regulations, of the Sunshine Ordinance. Additionally, the Board of 
Supervisors had concerns that there were persons servings as members on both the JCGC 
Board of Directors and the Japantown Task Force and constituted a conflict cf interest. 

In response to these concerns, the Department of Parking and Traffic has revised the 
proposed Lease to require that the JCCC and the Japantown Task Force enter into a 
vfOU to receive funding. The MOU requires that the Japantown Task Force submit an 
annual plan, in detail, the purpose of the funds for the upcoming year to the Parking and 
. raffle Commission or its succeed!.".; entity and th- r '-^'^~"-=- 



nirc'ier's Office for aooroval. All 



jnds shall be disbursed on a cost reimbursement basis. The MOU also recu 
lpantown Task Force abide by the regulations of the City's Sunshine Orcfii 



that ll-u 



[41 S) S54-PASK 



(41 5) 554- = ;34 



Vsn Meaa Avonue. Sjllo 410 

10 



in Frarclsco. CA 34102-451 



Attachment. III 
Pa°;e 2 cf 2 



Sarah Graham 
May 9, 2002 
Pase 2 of 2 



The Lease was also revised to increase the 550,000 per year lo SI 00,000 per year. After 
further review, the increased amour t would be more appropriate to assist the Japantown 
Task Force to market the Japantown community, and create a long-term conceptual plan 
for furthering community business and interest. The funds must also be used for 
community outreach, signage, urban landscape improvements and sidewalk maintenance 

In regard to the concerns of the potential conflict of interest, the Department of Parking 
and Traffic has received three resignations from members of the JCGC Board of 
Directors who also serve as member; of the Japantown Task Force. 

Please call me at 554-9869 if you require additional information. 
Cc: Ronald Szeio - Acting Director, PA 



AftKISCCerEBe-'JiiiKiiiC.'r.ier-Mc-ne n S.Gmh:m k .'CGC lax loi ;• :-:: j. 

11 



Memo to Finance Committee 

Jun 5, 2002 Finance Committee Meeting 

Item 2 - File 02-0842 

Note: This item was continued by the Finance Committee at its meeting of May 
29, 2002 pending submission of additional information by the Department. 



Department: 
Item: 



Description: 



Recreation and Park Department 

Ordinance waiving the competitive bid requirements for 
the Recreation and Park Commission's award of a 
contract not to exceed $2.5 million over a five year period 
for renovation of playgrounds, restoration of natural areas 
and implementation of erosion control measures in San 
Francisco parks, and exempting the contract from 
prevailing wage requirements. 

The proposed ordinance would waive the City's 
competitive bidding requirements to authorize the 
Recreation and Park Department (RPD) to award a 
contract, without the use of competitive bidding 
procedures, in an amount not to exceed $2.5 million, to 
the San Francisco Conservation Corps (SFCC), a 
nonprofit organization, for 1) renovation of park 
playgrounds, 2) restoration of designated Significant 
Natural Resource Areas, and 3) implementation of erosion 
control measures in the parks throughout the City. The 
proposed ordinance would also exempt the subject RPD 
contract with SFCC from prevailing wage requirements, 
pursuant to Section A 7.204 of the City's Charter. 

Attachment I, provided by Mr. Marvin Yee of the RPD, 
contains a) program descriptions for the work to be done 
under the contract, b) various RPD facilities where the 
work is to be done, c) the allocation of funds by work 
category for the $2.5 million contract, d) hourly rates for 
services to be provided, and e) funding sources for the 
contract. 

According to Mr. Yee, Significant Natural Resource Areas 
are defined as RPD properties that meet specific criteria 
including properties which contain natural biotic or 
geomorphic remnants of the indigenous landscape, 
contain rare types of species or habitat, and are 
vulnerable to degradation from an imminent ecological 
crisis. Mr. Yee reports that there are approximately 26 
such designated areas in the City, all of which may 
benefit from the proposed restoration work under the 
contract. According to Mr. Yee, at least eight playgrounds 
would be renovated under the contract, to comply with 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

12 



Memo to Finance Committee 

Jun 5, 2002 Finance Committee Meeting 

safety standards and wheelchair accessibility 
requirements. Mr. Yee also states that erosion control 
methods, at a minimum of five park locations, would be 
implemented under the contract to prevent park 
deterioration and to protect park built facilities and 
landscapes. 

The proposed ordinance would also exempt the subject 
RPD contract with SFCC from prevailing wage 
requirements. 

The SFCC is eligible to be exempt from prevailing wage 
requirements in its contract with the RPD because SFCC 
meets the conditions for exemption set forth in Section A 
7.204(b) of the City Charter. Section A 7.204(b) provides 
that the Board of Supervisors may exempt from the 
prevailing wage requirement any contract where the work 
is to be performed by a nonprofit organization that 
provides job training and work experience for 
disadvantaged individuals in need of such training and 
experience, and the nonprofit organization either (1) has a 
board of directors appointed by the Mayor or (2) exists 
primarily to design and build urban gardens, yards, and 
play areas. SFCC is a nonprofit organization that 
provides job training and work experience for 
disadvantaged individuals. According to Mr. Yee, the 
SFCC has a 16-member board of directors appointed by 
the Mayor and exists primarily to design and build urban 
gardens, yards, and play areas. 

Comments: 1. According to Mr. Yee, the proposed ordinance 

incorrectly states that the term of the contract would be 
four and one-half years. The correct contract term would 
be five years. 

2. The subject contract had a May 1. 2001 beginning date 
and a termination date of April 30, 2006. According to Mr. 
Yee, the DPR is requesting approval of this proposed 
ordinance at this time, over one year after the contract 
starting date, because of extended labor union 
discussions. Mr. Yee reports that to date, no funds have 
been expended nor have any services been rendered by 
the SFCC in relation to the contract. According t Ms 
Mary King-Gorwky of RPD. the tern: 3 five-year 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

13 



Memo to Finance Committee 

Jun 5, 2002 Finance Committee Meeting 

contract is now expected to begin on June 15, 2002 and 
terminate on June 14, 2007. 

3. Attachment II is a memorandum provided by Mr. Yee, 
which states the reasons as to why the RPD is requesting 
to award a $2.5 million contract without utilizing the 
City's competitive bidding procedures. 

4. According to Mr. Yee, the source of funds for the 
52,500.000 contract over its five-year term will include 
approximately $1,000,000 in anticipated CDBG grant 
funds, $125,000 in anticipated other grant funds, and 
$1,375,000 in anticipated Open Space Program funds and 
General Fund monies. According to Mr. Yee, of the 
$1,375,000 in Open Space and General Fund monies, 
$200,000 has been included in the RPD FY 2002-2003 
budget, and the remaining $1,175,000 will be requested 
by the RPD in future RPD budgets. 

Recommendations: 1. In accordance with Comment No. 1, amend the 

proposed ordinance to reflect the correct contract term of 
five years, not four and one-half years, as is presently 
contained in the ordinance. 

2. Approval of the proposed ordinance, as amended, is a 
policy matter for the Board of Supervisors. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 
14 



Memo ta 5inar.cs Committee 

Mav 29, 2002 Finance Committee Mesons 



Renovation ct cauarm ; piay areas 



>:ires — av —elude, cut .-.or lumteo to. : 

24"' St/York V'ni ?et!c 

Buchanan 5c. Mall (Secween Turk and Goiden Gate StsJ 

Crocker Amazon Playground (Geneva/Moscow Scs.; 

Hayes Valley Playground (K a .ves/3uchanan Sts.) 

Keiloch-V'eiasco Playground 

Kimball Playground (Hlis/Piercs S3.) 

Little Hollywood Park (Tocoloma/Lathrop Scs.) 

Silver Terrace Playground (Watervilia St.) 

~ccce of Work : 

Provide materials and labor for. but net limited to: 

Site demolition 

mstaiiation of piay equioment 

Installation ofresiiie.it suriacing, including rubber —arcing and playground sand 

Concrete work 

Decomposed granite paving 

Disability access improvements 

Landscaping 

Scope of work shall not include carpentry, electrical, piumbmg. or ironwork, unless 
approved by the SFRPD .Assistant Superintendent of Parks, Structural Maintenance 

Personnel ?„r.tes : 

Corpsrr. ember Rate: S24.50/hour 
Supervisor Rate: S24.50/hour 

Estimated 3udge:: 52.000.000 fc: 'he 5-year contract 



n~a:;c sources or runes 



Sl.QOO.CCO Grants 

Sl.GCQ.0CC Dpen Space Proursm and Gene- ' - 

S2.000.000 TOT.\L 



15 






Memo :o PLnar.ce Committee 

May 29. 2002 Finance Committes Meedng 



KasccTSEcn cr r. 






Bayview Kill rlawkEiil 

Brccscs Property hake Merced 

3uena Vista Park Mount Davidson 

Edgehiil Oper. Space Sl-.arp Park 

Goideri Gate Park 7'^in Peaks 

Scope of w'ork : 

The scope ofwock will consist of, but noc limited cc, the following: 

Broom - Seedlings removed in spnng by hand pulling; adult removed usins weed 
'■vrer.ches or band chain saws when individuals are :co large for weed wrenches 

Ferjiel - Hand removal of adults ar.d seedling with mattocks. 

Co'oneaster - Cut shrubs with chain saw loppers. 

Euclayptus - Saplings of 5" and less removed with chair; saws. 

Pampas grass - Hand removal with shovels and mattocks. 

Plane and debris removal activities will be combined with other restoration activities such 
as seed collection, plant propagation, nursery maintenance and planting. 

Personnel Races : 

SFCC Rare: 523<hour 

H;:;~.ated Budget : 5250,000 for the 5-ycar contract 

.--~.::~rr,t;d Sources of Funds : 

SI 25.000 Grants 

S ". 25.000 Open Sz^cs Program 

5250.000 TOTAL 



16 






Memo :o rir.ance Ccrrrrnitts: 
Mav 29. 2002 Finance Comn 



Sites, but noc 



Busna Visia Park Pine Lake Pari-: 

C-oider. Gate Park Pioneer Park 

McLaren Park 

Scone of'.Vcrk : 

Provide materials and later for, but .ice Limited :c. proven and acceptable methods c: 
ercsicn control, including trail improvernerits. minor gracing, retaining v/aiis iro to 3' 
high, and biocechnical siope stacikration techniques (brush layering, branch narkm 0, 
wattling, olasric or jute netting, and :2- vegetation). 

Scope of work shail not include car.cpy thinning, retaining vt-alls greater than 3 ' hisfc or 

irrigation systems, unless approved by the SPRPD Assistant Superintendent of Parks 
(Structural Maintenance) cr the SPPPD Urban Forester. 

Personnel Rates : 

Corpsmember Rate: S23.CC/hour 

Field Supervisor Rate: 523.00/hcur 

Fstimarod Budget : S250.0C0 for the 5-year contract 

Anticipated Sources of Funds : Open Space Program and C-er.erai Fund 



17 



?2.££ 1 or 1 



Memo :o Finance Czrrsr.\~sz 

May 29, 2002 Fir.ancs Commitce: Meeting 

Annchment 3 

The Re-zzz-cr. and Paris Decartr.er.t (R?D) -wishes :c award the sub jeer contracr 
for an am lout.: r.ct CO exceed 52.5 rJIIion over a period of five years, without 
comseddve bid. ever, ihcush the expenditure involved in each cor.rrac: exceed- 
S50.Q00, bec-uie: 

(Ij the development of disadvantaged indi\dduais will best serve the public 
interest by having a signiflcar.: posidve ^npac: or. the economic health of the 
City and 

(2) the 5FCC has beer, awarded 5200,000 Community Development Block Gran: 
(CDBG) amounts e'er 24 ,h St./ibrk Mini Park and Crocker Amazon 
Playground. The RFD ^-Sr.es to supplement those grant amounts to 
completely fund mess rencvaden projects. 



18 



Memo to Finance Committee 

June 5. 2002 Finance Committee Meeting 

Item 3 - File 02-0707 



Department: 
Item: 

Amount: 
Source of Funds: 



District Attorney 

Ordinance appropriating $283,764 from the Reserve for 
the Hanion Arbitration Award to cover a projected 
General Fund Fiscal Year 2001-2002 deficit in salaries 
and fringe benefits in the District Attorney's budget. 

$283,764 

General Fund Reserve Hanion Arbitration Award, 
established in the amount of $2,388,000. The Hanion 
Arbitration Award granted salary increases for attorney 
classifications covered by the Memorandum of 
Understanding (MOU) between the City and the 
Municipal Attorneys Association for the two year period 
from July 1, 2001 to June 30, 2003.. approved by the 
Board of Supervisors in June of 2001. According to Mr. 
Ben Rosenfieid, the Mayor's Budget Director, $2,388,000 
was appropriated in the FY 2001-2002 budget as a 
designated General Fund reserve for Municipal Attorneys 
Association salary increases City-wide in accordance with 
the MOU. 



Description: 



Proposed Budget: 



Jnder this proposed ordinance, the District Attorney's 
Office is requesting a supplemental appropriation in the 
amount of $283,764 for a projected Fiscal Year 2001-2002 
deficit in salaries and fringe benefits. Mr. Daley Dunham 
of the District Attorney's Office states that the projected 
General Fund deficit is due to increased salaries and 
fringe benefits resulting from the MOU with the 
Municipal Attorneys Association. 

This supplemental request of the District Attorney's 
Office totaling $283,764 would be expended as follows: 



Amount 



Permanent Salaries 

Fringe Benefits 
Total 



$240,490 

43.274 

$283,764 



'.I :ard of Supervisors 

Budget Analyst 

19 



Memo to Finance Committee 

June 5. 2002 Finance Committee Meeting 

Comments: 1. The Controller's latest projection report for the District 

Attorney's Office General Fund Salaries and Fringe 
Benefits Accounts projects a deficit of §542,620, based on 
actual expenditures through the pay period ending April 
12, 2002. Mr. Dunham states that the District x<\ttorney's 
Office projects a $500,781 General Fund deficit or $41,839 
less than the Controller's projection. Mr. Dunham reports 
that the District Attorney's Office has identified a total of 
$215,228 in available funding from: (a) unencumbered 
workorder funds of $116,478 in salaries and fringe 
benefits for work the District Attorney has already 
performed; (b) new grant funds in the amount of $18,750 
(File 02-0543); and (c) a Gun Violence grant m the 
amount of $80,000 (File 02-0624). According to Mr. 
Dunham, the District Attorney's Office will use the 
$215,228 to partially fund the Department's projected 
deficit, resulting in an unmet need of $285,553 (the 
Department's projected deficit of $500,781 less $215,228). 

Mr. Dunham states that the District Attorney's Office had 
requested a supplemental appropriation in the amount of 
$283,764, or $1,789 less than the District Attorney's 
Office anticipated deficit of $285,553 because the District 
Attorney's Office based its request on projections from 
earlier pay periods. However, according to Mr. Dunham, 
based on the District Attorney's latest projections, 
sufficient funds are available in the District Attorney's 
Office' budget to absorb the difference of $1,789. 
Therefore, according to Mr. Dunham, the amount 
requested of $283,764 will be sufficient to provide for the 
remaining deficit in salaries and fringes. 

2. The Board of Supervisors previously approved a 
supplemental appropriation for the City Attorney's Office 
(File 02-0475) authorizing an appropriation of $442,741 
from the Reserve for the Hanlon Arbitration Award. This 
subject proposed supplemental appropriation of $283,764 
for the District Attorney's Office will be the only other use 
from the Reserve for the Hanlon Arbitration Award 
according to Mr. Rosenfield. Mr. Rosenfield advises that 
the balance in the Hanlon Arbitration Award Reserve of 
$1,661,495, consisting of the original reserve of 
$2,388,000 less $442,741 for the City Attorney's Office 

Board of Supervisors 
Budget Analyst 
20 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 

less $283,764 for this subject District Attorney request, 
will be closed out to the General Fund Reserve as of June 
30, 2002. 

Recommendation: Approve the proposed supplemental appropriation. 



Board of Supervisors 

Budget Analyst 

21 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 

Item 4 - File 02-0794 



Department: 
Item: 



Amount: 



Source of Funds: 



Description: 



Parking Authority 

Mayor's Office of Public Finance 

Resolution (1) approving the issuance of Parking Revenue 
Refunding Bonds by the San Francisco Ellis-O'Farrell 
Parking Corporation in an amount not to exceed 
$6,500,000, to refinance bonds issued in 1992 which 
funded the seismic upgrade and expansion of the Ellis- 
O'Farrell Public Parking Garage; (2) approving a bond 
indenture modifying the maximum amount of the 
Contingent Reserve Fund by 50 percent from $500,000 to 
$750,000; (3) authorizing and ratifying the execution and 
delivery of documents reasonably necessary for the 
issuance, sale and delivery of such refunding bonds; and 
(4) ratifying previous actions taken in connection 
therewith. 



Not to exceed $6,500,000 

San Francisco Ellis-O'Farrell Parking 
Parking Revenue Refunding Bonds 



Corporation 



According to Mr. Ron Szeto of the Department of Parking 
and Traffic (DPT), the City-owned Ellis-O'Farrell Public 
Parking Garage, located at 123 O'Farrell Street, is leased 
by the City to the San Francisco Ellis-O'Farrell Parking 
Corporation, a nonprofit corporation. Attachment I, 
provided by DPT, contains background information on the 
San Francisco Ellis-O'Farrell Parking Corporation and 
their existing lease agreement with the City. Mr. Szeto 
advises that, under the terms of the approximately 26- 
year lease between the City and the Corporation which 
began on June 1, 1991 and terminates on April 1, 2017 1 , 
the Corporation is required to obtain Board of Supervisors 
approval for the issuance of tax-exempt bonds and the 
execution of various documents related to such bonds. In 
1992, the Board of Supervisors authorized the 
Corporation to issue $6,500,000 in Parking Revenue 
Bonds to seismically upgrade the Ellis-O'Farrell Garage 



1 According to the terms of the lease between the City ana the Corporation, the lease period began on 
June 1, 1991 and terminates on the earlier of 50 years 'May 31 2041 ) or the date of the last debt 
service payment (April 1, 2017). 

BOARD OF SUPERVISC? : 

BUDGET ANALYST 

22 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 



and expand the Garage by adding approximately 350 
parking spaces on two and one-half additional parking 
levels. According to Ms. Nadia Sesay of the Mayor's 
Office of Public Finance, the outstanding principal 
amount of debt from the original 1992 36,500,000 bond 
issuance is $5,225,000 as of May 20, 2002. 

Approval of the proposed resolution would authorize the 
San Francisco Ellis-O'Farrell Parking Corporation to 
issue tax-exempt Parking Revenue Refunding Bonds in an 
amount not to exceed $6,500,000, in order to refund the 
outstanding 1992 Parking Revenue Bonds. According to 
Mr. Szeto, these Parking Revenue Refunding Bonds 
would be repaid from the gross receipts of the Ellis- 
O'Farrell Garage. According to Mr. Szeto, these Parking 
Revenue Refunding Bonds, as with the original 1992 
Parking Revenue Bonds, do not require the City's General 
Fund to repay the bonds. 

According to Ms. Sesay, the existing 1992 Parking 
Revenue Bonds have interest rates of between 6.9 percent 
and 7.125 percent and were issued with a 25-year term, 
with a final payment date on April 1, 2017. The 1992 
Parking Revenue Bonds can be called from investors on or 
after April 1, 2002. According to Ms. Sesay, the estimated 
true interest cost for the subject proposed Parking 
Revenue Refunding Bonds is 4.89 percent and the bonds 
would have an approximately 15-year term with the final 
payment still due on April 1, 2017. Attachment II, 
provided by the Mayor's Office of Public Finance, is a debt 
service comparison between the 1992 Parking Revenue 
Bonds and the proposed Parking Revenue Refunding 
Bonds, and an explanation of the one-time versus the 15- 
year aspects of the savings. 

As shown in Attachment II, the proposed refinancing of 
the 1992 Parking Revenue Bonds will result in an 
estimated total savings in aggregate debt service of 
$430,043.61. of which $428,000 would be realized on the 
anticipated issue date of July 10, 2002 as a one-time 
upfront savings plus $2,043.61 in net present value 
savings over the 15-year term of the bonds. This 
estimated savings is based on a par amount of $5,225,000 
(the outstanding principal amount of debt on the original 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

23 



Memo to Finance Committee 

June 5. 2002 Finance Committee Meeting 



1992 bonds) at an average annual interest rate of 4.89 
percent for a term of 15 years, according to Ms. Sesay. 

According to the terms of the existing indenture between 
the Corporation and the Bank of America National Trust 
and Savings Association for the 1992 Parking Revenue 
Bonds, the Corporation retains 15 percent up to $500,000 
maximum of net annual revenues 2 from the operation of 
the Ellis-O'Farrell Garage in a Contingent Reserve Fund 
to be used only for Garage capital improvements. The 
proposed resolution would approve an indenture between 
the Corporation and the Trustee of the proposed 
Refunding Bonds, to be selected in June of 2002 through a 
competitive bid process, to increase the ma xim um amount 
net revenues that the Corporation retains in the 
Contingent Reserve Fund by 50 percent from $500,000 to 
$750,000. According to the terms of the proposed 
indenture, whenever any funds are withdrawn for capital 
improvements from the Contingent Reserve Fund, the 
amount withdrawn would be replaced from subsequent 
net revenues up to $750,000. However, the Contingent 
Reserve Fund could not be allocated an amount in excess 
of 15 percent of the Garage's net revenues in any one 
year. According to Mr. Szeto, increasing the maximum 
amount of the Contingent Reserve Fund by 50 percent is 
necessary to allow the Corporation to set aside sufficient 
funds to address needed capital improvements including 
office renovations, the purchase of digital cameras for the 
vehicle entry lanes and stairwells, and other necessary 
improvements. 

Attachment III, provided by DPT, shows the actual and 
projected sources and uses of Ellis-O'Farrell Garage 
revenues from 1999 to 2017 (year ending April 30 th ). As 
shown in Attachment III, in 2003 the Corporation would 
retain in the Contingent Reserve Fund the estimated one- 
time savings of $428,000 from issuance of the proposed 
Parking Revenue Refunding Bonds, resulting in a 
Contingent Reserve Fund total of $467,925 in 2003 (year 
ending April 30 th ). According to the projections contained 
in Attachment III, at no time during the 15-year term of 



: Net revenues are equal to gross receipts less Parking Taxes, operating expenses and annual debt 
service. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

24 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 

the proposed Parking Revenue Refunding Bonds does the 
Contingent Reserve Fund total more than $467,925. 
Therefore, the Budget Analyst questions the need to 
increase the maximum amount of net revenues that the 
Corporation retains in the Contingent Reserve Fund by 
50 percent, from $500,000 to S750.000, as is proposed in 
the new indenture for the subject Parking Revenue 
Refunding Bonds. Mr. Szeto responds in Attachment rV to 
the Budget Analyst's point by stating ''There is always the 
possibility that the planned capital work for 2003 and 
subsequent years may not start or be completed exactly as 
scheduled within the Corporation's fiscal year. For this 
reason and the real possibility that the economy and the 
garage revenues will recover in the near future, the 
proposed Contingent Reserve Fund maximum limit of 
$750,000 will insure the availability of needed capital 
improvement funds without imposing a use or lose 
situation that does not have a negative financial impact to 
the City." 

According to Mr. Szeto, the Parking and Traffic 
Commission must approve capital improvement 
expenditures from the Contingent Reserve Fund, which 
are incurred by the San Francisco Ellis-O'Farrell Parking 
Corporation. Mr. Szeto reports that such expenditures are 
not subject to Board of Supervisors approval. 

Comments: 1. According to Ms. Sesay, the principal that would be 

outstanding on the prior 1992 Parking Revenue Bonds 
will be $5,225,000 on the daze that the 1992 Parking 
Revenue Bonds are called, which is anticipated to be on 
August 12, 2002. The prior 1992 Parking Revenue Bonds 
have a Debt Service Reserve Fund which has a current 
balance of approximately $585,693. Those monies from 
the Debt Service Reserve Fund would be released when 
the 1992 Parking Revenue Bonds are defeased. 3 According 
to Ms. Sesay, approximately .5500.840 of the $585,693 
Debt Service Reserve Fund would be used to fund a new 
Debt Service Reserve Fund 4 for the proposed refunding 



3 Defeasance is the term used to describe the termination of : - md interests of the 
bondholders upon final payment of all debt service, in the man:: » i by the terms and 
conditions of the bond resolution. 

4 Under the terms of the proposed refunding bond issuance and in accordance - .vith Internal Revenue 
Service 'IRS) Tax Regulations, the Corporation is required to fund vice Reserve Fund m 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

25 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 

bonds. According to Ms. Sesay, the balance of $19, 753 
(§585,693 less $565,940) would be allocated to an Escrow 
Fund for use in paying off the 1992 Parking Revenue 
Bonds. Ms. Sesay advises that a Debt Service Reserve 
Fund is required to provide for debt service payments in 
case of a funding shortfall. If a shortfall occurs, and the 
Trustee is required to pay debt service from this Reserve 
Fund, then the Reserve Fund would be replenished by 
Garage revenues. 

2. According to Ms. Sesay, the proceeds deposited in the 
Escrow Fund from the anticipated July 10, 2002 sale of 
the subject Parking Revenue Refunding Bonds will be 
held by a third party trustee (the "Escrow Agent") to be 
selected through a competitive bid process in June of 
2002. On the anticipated bond call date of August 12, 
2002, the Escrow Agent will redeem the 1992 Parking 
Revenue Bonds with the monies held in the Escrow Fund. 

3. According to Ms. Sesay, the cost of issuance is 
estimated to be $250,000 for the proposed refunding 
bonds. Ms. Sesay reports that the cost of issuance is to be 
paid with bond proceeds. 

4. Ms. Sesay anticipates that the proceeds from the sale 
of the subject Refunding Bonds will be invested in State 
and Local Government securities until August 12, 2002, 
the anticipated call date for the 1992 Parking Revenue 
Bonds. 

5. Ms. Sesay notes that the exact amount of the proposed 
Parking Revenue Refunding Bond issuance in an amount 
not to exceed $6,500,000, will not be known until the date 
of the sale of the Parking Revenue Refunding Bonds, as 
the interest rate will affect the aggregate principal 
amount needed to fund the refunding escrow account and 
the bond insurance. However, Ms. Sesay advises that it is 
standard industry practice that issuance of refunding 
bonds must result in a debt service savings of at least 

the amount equal to the lesser of 10 percent of the par amount of the proposed Refunding Bonds, 100 
percent maximum annual debt service or 125 percent average annual debt service on the proposed 
Refunding Bonds. In this case, the amount of the Debt Service Reserve Fund is an amount equal to 
100 percent maximum annual debt service on the proposed Refunding Bonds or approximately 
$565,940. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

26 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 

three percent of the bonds to be refunded, which in this 
case, for the original 1992 bonds, is $5,225,000. Therefore, 
in order to assure debt service savings of at least three 
percent, the Budget Analyst recommends that the 
proposed resolution be amended by adding the following 
provision: 

"further provided, that the par amount of the 
refunding bonds issued shall not exceed an 
amount that will produce a net present value 
debt service savings of at least three percent 
of the refunded amount of $5,225,000 to 
defease the Series 1992 Bonds, or 8156,750 
as certified by the Corporation's independent 
financial advisor as a pre-condition to the 
Coiporation's delivery of the Parking 
Revenue Refunding Bonds to the Trustee." 

Ms. Sesay concurs with the Budget Analyst's 
recommendation. 

6. According to Ms. Theresa Alvarez of the City 
Attorney's Office's, although the proposed resolution 
includes a provision to ratify previous actions taken in 
connection with the issuance of the proposed Parking 
Revenue Refunding Bonds, Ms. Alvarez is not aware of 
any such actions that have been taken. 

Recommendation: 1. In accordance with Comment No. 5 above, amend the 

proposed resolution to require that the par amount of the 
Parking Revenue Refunding Bonds to be issued by the 
San Francisco Ellis-O'Farrell Parking Corporation shall 
not exceed an amount that will produce a net present 
value debt service savings of less than three percent of the 
$5,225,000 which is the outstanding balance of the 1992 
bonds to be refunded. 

2. As noted in the Description Section above, the Budget 
Analyst questions the need to increase the maximum 
amount of net revenues that the Corporation retains in 
the Contingent Reserve Fund by 50 percent, from 
$500,000 to $750,000, as is proposed in the new indenture 
for the subject Parking Revenue Refunding Bonds, 
because at no time during the 15-yeax term of the 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

27 



Memo to Finance Committee 

June 5. 2002 Finance Committee Meeting 



proposed Parking Revenue Refunding Bonds does the 
Contingent Reserve Fund total more than $467,925 
according to the projections contained in Attachment III. 
Therefore, approval of the proposed resolution, as 
amended, is a policy decision for the Board of Supervisors. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

28 



F=CN : PfiFKlNG GUTHCRIT 



CBANCISCO 



Attachment I 
Page 1 of 3 

City and County of San Francisco 




SEPArtTUEUT OF PAPKINC 4 TPAFF IC 



WILUE LEWIS BROWN. JR.. Mayor 

=REO M. HAMOUN, EXECUTIVE DIF.£C~CR 



RONALD SZ~0. ACTING DIRECTOR. PARKING AUTHORITY 




MEMORANDUM 



DATE: 
TO: 

FROM: 



May 22, 2002 



Ms. Anna LaForte 

Analyst 

Budget Analyst's Offics 

Ronald Szeto PL-fL 
Acting Director 
Parking Authority 



SUBJECT: City of San Francisco Ellis-O'Farrell Parking Corporation Refunding 
Bonds 



Background: 

In 1991, the Board of Supervisors approved a Lease, dated as of June I, 1991, (the 
"Lease") between the City and County of San Francisco (the "City"") and the City of San 
Francisco Ellis O'Farrell Parking Corporation (the "Corporation") for the management of 
the Ellis O'Farrell Garage (the "Garage"). Under the terms of the Lease, the Corporation is 
required to obtain City approval for the issuance of tax-exempt bonds and the execution of 
various documents relating thereto. 

Also under the terms of the Lease, the Corporation is required to solicit a professional 
parking operator through a competitive process for the daily parking management of the 
Garage and to obtain the Parking and Traffic Commission authorization to execute a 
management agreement between the Corporation and the narking operator. The 
Corporation is also required to submit an annua! operating budget to the Parking and 
Traffic Commission for review and to the Controller's Office for approval. Furthermore, 
the Corporation is required to obtain the Parking and Traffic Commission authorization to 
expend funds for capital improvements to the Garage. 

la 1992, the Corporation issued Parking Revenue Bonds the ("Series 1992 Bones") to 
seismically upgrade the Garage damaged by the Loma Prieta Earthquake ar.d to expand 
the Garage by adding approximately 350 spaces on two and one-half additional parking 



=AX (-415) 554-933- 



25 Van Nesc Avonuo. Sulla 410 



San Francisco, CA 9410:M5?5 



Attachment I 
Page 2 or 3 



Ms. Anna LaFortc 
. la: 22,2002 



?-ze2of: 



As of May 1, 2002, the Corporation 'mc. an outstanding principal amount of 55,225,000 
of Series 1992 Bonds. Final maturity on the Parking Revenue Bonds is April 1. 201 7. 
Interest rates range from 6.90% to 7.125% (the weighted average interest rate is 7.12%) 
and the annual payment is approximately S5S0.000. 

Under the Indenture, dated as of January 1, 1992, between the Corporation and the Bank 
of America National Trust and Savings Association, as trustee, (the "Indenture"), capital 
improvements at die Garage are funded from the Corporation's Contingent Reserve Fund 
('"Capital Improvement Fund")- Over the past several years, the Corporation has depleted 
ail of the available funds in the Capital improvement Fund on needed capital 
improvements at the Garage. In some instances our Department and the Controller's 
Office have had to utilize the Corporation's Repair and Replacement Fund to pay for 
needed capital projects. The Repair and Replacement Fund is not intended for this 
purpose. 

Pursuant to the Indenture, the Corporation retains 15% (up to 5500,000 maximum) of 
"Net" revenues from the operations of the Garage to be used for capital improvements. 
For fiscal year 2001-2002, the Corporation projects less than 540,000 of allocated "Net" 
revenue will be available to augment the Capital Improvement Fund. 

One af our goals in the refunding process is to determine a proper net revenue allocation 
for the Capital Improvement Fund. 

Proposal: 

5 taff and the Corporation propose to authorize the Corporation to take advantage of 
lower interest rates by issuing refunding bonds and to apply/deposit most of the "Net" 
saving:, after payments of the cost of issuance which shall total approximately S250.000 
into the Capital Improvement Fund. Based upon current market conditions as of May 1, 

it is estimated that the deposit to the Capital Improvement Fund would be 
approximately 5500,000. If rates were to increase 25 basis points, the amount available 
it would be approximately $453,000. 

Driginall; e also proposed adjusting the net revenue allocation from 15% to 25% to 

I iing into the Cap:". Improvement Fund and increasing the maximum 
- Capital Improvement Fund from 5500.000 to 52,000,000. 



Attachment : 
?ag e 3 of 3 
fiUTHCRITY FKGNE MO. : rr-i ?r?5 



Ms. Anna LaFone 
May 22, 2002 
Pace 3 of 3 



MUNI supports the Corporation's request to deposit the "Net" savings from the refunding 
into the Capital Improvement Account and agreed to further assist the Corporation by 
increasing the maximum limit from $500,000 to S750.000. However, at this time, MUNI 
does not support the extra 10% net revenue allocation to the Capital Improvement Fund. 
Hopefully, as the economy improves, the Corporation could generate higher net revenues 
and begin to adequately replenish the Capital Improvement Fund. Furthermore, MUNI 
agreed to revisit the Corporation's capital needs in the future if necessary, in the 
meantime, the Corporation could use the cash saving from the refunding to address their 
capital needs for the next several years. 

The Corporation is being assisted in this bond refunding by a team of individuals 
representing: the Department of Parking and Traffic, the Mayor's Office of Public 
Finance, the City Attorney's Office, Co-Bond Counsels (Orrick r Harrington &. Sutcliffe 
and Lofton and Jennings). Co-Financial Advisors (Public Financial Management and 
Municipal Capital Management), and Corporation Counsel (Mr. Richard Dole). 

As of May 1, 2002, the refunding team estimates a True Interest Cost (TIC) of (4.63% 
based on present market condition and 3500,000 available from the capital improvement 
account. The final maturity of the bonds would not be extended beyond the term of the 
Series 1992 Bonds, which is April I, 2017. 

The cost of issuance of the refunding bonds is estimated at (S250.000). However, the 
Corporation would not be obligated for any significant amount should the market 
conditions change unfavorably and the refunding bonds are not issued. 

The Department recommends adoption of the proposed Resolution. 



Diana Hammons. D? i 



?A.J.:<:NCGt.-.'c: Ellii fJ'Firrell drag: Sudgr! Ar.slysl mesv 

31 



SOURCES AND USES OF FUNDS 

EIIis-O'Farrell Parking Corporation 

2C02 Refunding of Scries 1992 

Cu.-rr at Market Rues a of Mar 7, 2C02 Plus 25 Basts Points 

Contingency Fund 



Page 1 of 3 



Sou/us: 



3or.d Proceeds: 
Par Amount 



5, 990. 000 00 



Outer Sources of Funds: 
Bond Fx-.ds 
DSR? 
Repair wd Replacement Fund 



172.0i6.00 
5S5.693.42 

100.000.CO 



353.739.42 



6,338.739.42 



Uses: 



Project Fund Deposits: 
Contingent Reserve 



42S.O00.00 



Refunding Escrow Deposits: 
Cash Deposit 
SLG Purchases 



0.66 
5.454.126.00 
5.454.126.66 



Other Fund Deposits: 

Debt Service Reserve Fund 
Repair aed Replacement Fund 



565.939.99 
100.000.00 



665,939.99 



Delivery Date Expenses: 
Cost of Issuance 
Underwriters Discount 



Other Uses of Funds: 
Addiacnai Proce 



Note: Run with A 2ca.e ?:•_: 25 E::;s Paints sne no insurance Cc:: 



250.000.00 
3S.S70.00 



2SS.870.00 



32.77 



6.333.739 42 



May 9. 2002 9:53 xt. Prepared by Public Rr.assia] Manager 



ner.L me. 



32 



P=gc 1 



Due 



SAVINGS 

Eilis-O'rirrell Pvkiog Corpo.-auon 
2002 Refunding of Scries 1592 
sni Market Rates is of May 7, 2002 Plus 25 Bisis Points 
Contingency j-ujd 



Prior 

De'si Service 



Refunding 
Debt Stance 



Present Value 

to 07/10/2002 

Savings @ 4.79! 3607% 



0^/01 I20Q1 
OA/OlCOO-l 
04/01/2005 
04/0 1/2006 
04/01/2C07 
C4/OI/200S 
04/01/2009 
04/01/2010 
04/01/2U11 
04/01/2012 
04/01/2012 
04/01/2014 
04/01/2015 
04/01/2016 
C4/0 1/2017 



576.320.00 
577,675.00 
577,000 00 
58025526 
577.087.50 
577.850 CO 
577.187.50 
5S0.i00.0O 
576,231.26 
590,937.50 
57?,50<5.25 
579.293.76 
577.543 76 
S79.456.26 
578,475.00 



565,929.99 
559,515-50 
560.7G2.00 
560272.50 
553.442.50 
560.344.00 
560,714.00 
564,727.00 
557.209.50 
563,842.00 
55a.S50.CO 
562.57S.50 
559.4S6.50 
559.SU50 
558.302.00 



10.880.01 

18,159.50 
16.238.00 
19.983.76 
15.645.00 
17.506.00 
16.473.30 
15.373.00 
19.021.76 
17.095.50 
19,656.26 
16.7i5.26 
13,457.26 
19.641.76 
20.173.00 



13,444 67 
17,874.02 
15,235.66 
17.656.05 
15,703.45 
14.057.37 
! 2, 603.30 
11.206.S7 
13.05X24 
11.180.83 
12.15123 
9.346.63 
10.290.75 
10,378.17 
10.106.29 



8.674,820 06 8,410.800.49 264,019.57 



194,843.04 



Saving; Sutamarv 



PV of savings from ctsh 2ow 
Less: Prior funds on hand 
Plus: Refunding funds or. hind 

Net PV Savings 
Upfront Savings 

Total Savings 



194.843.04 
-SS8.739.42 
665.939.99 



2.043.61 
42S 000 00 



■ *ith A Scale Plui 25 Eiiis Poinu and no In:urw:e Cost 



23 9.53 am Prepared by Public ri-sr. 



ciaj Ma/iagcjr.snt, >.r 



33 



Pa$c 3 



Office of the Mayor 
san francisco 




Attachment II 
Page 3 of 3 

Willie Lewis Brown, Jr. 



May 29, 2002 



TO: 



FROM: 



Anna LaForte 
Budget Analyst 

Nadia Sesay 
Public Finance 



RE: 



Up-front Savings VS Level Savings 



We typically structure bonds so that there is level debt service. Therefore, when we 
structure a refunding, it is structured for level savings, which means that debt service 
remains level but is lower. In this case, we have decided to structure the savings so 
that it is realized up front and the debt service over the remaining life of the bonds 
would remain unchanged (or reduced very slightly). Both types of structures would 
result in similar present value savings. In the first case, each year's savings would be 
discounted to the closing date to give you the present value savings. In the second 
case, the savings are already essentially discounted because they are realized on the 
closing day. 



:ARLTON B. GOODLETT PLACE. ROOM 200, SAN FRANCISCO, CALIFORNIA 94102 
(415) 554-6141 34 
RECYCLED PAPER 



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35 



MAY. -29' 02 (WED) 16:22 



CITY k CO OF S. 



'ARKING DE?l 



City and County of San Francisco 




BEPA.HTMENT Of PARK1NQ * TRAfflC 




WILLIE LEWIS BROWN, JR.. Mayor 

FRED M. HAMDUN. EXECUTIVE DIRECTOR 

RONALD SZETO. ACTING DIRECTCR, PARKING AUTHORITY 

MEMORANDUM 

DATE: _ Mav 29, 2Q_Q2 



TO: 



FROM: 



Anna LaFortc 

Analyst 

Budget Analyst's Office 

Ronald Szeto P C 
Acting Director 
Parking Aulhoriiy 



SUBJECT: City of San Francisco Ellis-O'Farrell Parking Corporation Refunding 
Bonds (memo 2) 



In The past years, the Corporation had extensive work done at the Garage that costs over 
SI .5 million, which was well over the amount of funds and the maximum limit of the 
Contingent Reserve Funds. Our Department and the Controller's were able lo assist the 
Corporation with the needed repairs by utilizing another fund. However, the Contingent 
Reserve Fund is the fund established and the more appropriate funding source for this 
type of work. At this time, the Corporation has depleted the funds in the Contingent 
Reserve Fund. 

Originally, we recommended applying/depositing the cash saving from the refunding into 
the Contingent Reserve Fund, increasing the maximum amount of the from 5500,000 to 
$2, 000. 000 and the allocation of net revenues from 1 5% to 25%. Ffowevcr, after 
discussions with Muni, we agreed that the most beneficial proposal is to apply/deposit the 
cash saving from the refunding into the Contingent Reserve Fund for needed 
improvements and to increase the maximum amount from S500,000 to 5750,000 to give 
the Corporation the opportunity to retain all of the cash savings from the refunding and to 
retain a higher maximum if revenue increases in the future. 

Upon refunding the bonds and depositing the cash savings, the Corporation's Contingent 
Reserve Fund will closely approach the current maximum limit cf $500,000. There is 
always the possibility that the planned capital work for 2003 and subsequent years may 
not star, or be completed exactly as scheduled within the Corporation's fiscal year. For 
this reason and the real possibility thai the economy and the garage revenues will recover 
in the near future, the proposed Contingent Reserve Fund maximum limit of 5750,000 
will insure the availability of needed capital improvement funds without imposinc a use 
or lose situation that does not have a negative financial impact to the City. 



(415)554-PARK FAX (41S) 564-9624 



25 Van Nees Avenue, Suite 410 



San Francleco, CA B4102-4578 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 



Items 5 - File 02-0904 
Department: 

Item: 
Description: 



Public Utilities Commission (PUG) 
Water Department 

Ordinance approving revised schedules of rates to be 
charged by the San Francisco Public Utilities Commission 
for water service to its retail customers inside and outside 
the City and County of San Francisco. 

The PUC provides water service to two classes of 
customers. Separate rate schedules are adopted for (a) 
the Water Department's retail customers in San 
Francisco and outside the City 1 , and (b) the Water 
Department's "Suburban Resale Customers". Suburban 
Resale Customers are, collectively, 29 water agencies 
located in the Counties of Alameda, San Mateo and Santa 
Clara, that purchase water at wholesale rates from the 
San Francisco Water Department for resale to their retail 
customers. 

Water rate schedules for retail customers were last 
revised by the PUC effective -July 1, 2001 when retail 
rates to the water users in San Francisco and outside the 
City were increased by 8.65 percent. Suburban Resale 
water rate schedules were last revised effective July 1, 
2001 when resale rates were increased by 2.8 percent in 
accordance with the terms of a 1984 Settlement 
Agreement described below. 

Under Charter Section 2.109, the Board of Supervisors 
may approve, or reject, any rate, fee or similar charge to 
be imposed by any department, board or commission. 

Proposition H, approved by the voters on June 2, 1998, 
freezes retail water rates and sewer service charges at 
their current levels until July 1, 2006, subject to the 
following exceptions: 

• The rate freeze does not apply to the fees charged to 
customers located outside of San Francisco. 



1 The PUC has approximately 300 retail water customers outside :: the City, including II private 
fire protection customers and two municipal departments (the San ri-anciscc International Airport 
and the Sheriffs Department). 

Board of Supervisor: 
Budget Analyst 

37 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 

• The rate freeze could be suspended if the City declared 
an emergency, as defined by Charter Section 3.100. 

• The rates could be increased to repay the money 
borrowed through the issuance of bonds by the City for 
improvements to the water system approved by the 
voters in November 1997, but such rate increases can 
not exceed a total of 18 percent during the period 
between July 1, 1998 and July 1, 2006. 

• The rates could be increased to repay money borrowed 
for further improvements to the water and sewer 
systems approved by the voters in the future. 

With respect to Suburban Resale rates, the terms of a 
1984 Settlement Agreement and Master Water Sales 
Contract between the Suburban Resale Customers and 
the City, which were approved by the Board of 
Supervisors and resolved litigation which had been 
pending since 1974, dictate the method of rate setting for 
the Suburban Resale rate. Under that agreement, the 
City sets the wholesale water rates to recover all 
operating costs associated with providing water to the 
Suburban Resale Customers, plus a rate of return on all 
debt funded assets and revenue funded assets. 

Suburban Resale water service revenues, which are 
realized in excess of the computations made in accordance 
with the settlement agreement requirements, are credited 
to a "balancing account" which must be factored into the 
rate calculation for the following year. If the projected 
balancing account value and projected revenue from 
Suburban Resale Customers exceeds or falls short of 
projected costs and return and depreciation on assets used 
to provide Suburban Resale water by more than 2 
percent, adjustments to the Suburban Resale Customer 
rate schedules are mandated by the 1984 Settlement 
Agreement. 

The PUC is recommending no change to the existing 
Suburban Resale rate schedule in FY 2002-2003 becatise 
the PUC is projecting an over-payment of 1.3 percent 
made by the Suburban Resale Customers to the City 
under the existing rates. If adjustments of this nature 
are less than 2 percent, the Settlement Agreement does 
not compel the PUC to reduce the rate to Suburban 
Resale Customers. Since the estimated 1.3 percent rate 
Board of Supervisors 
Budget Analyst 

38 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 



reduction is less than 2 percent, the PUC has the 
discretion whether or not to make such a rate adjustment. 
Furthermore, the five year forecast of revenues indicates 
that rate increases will be required in FY 2003-2004 and 
subsequent years. Any FY 2002-2003 credit owed to 
Suburban Resale customers will be used to partially offset 
future rate increases charged to those customers. 

Water Rates for Retail Customers 

The PUC is proposing a rate increase for water rates 
charged to retail customers located in San Francisco and 
outside of San Francisco, of 8.6 percent on average. The 
percentage increase for different customers can vary 
slightly due to the need to round charges to the nearest 
whole cent. As noted above, Proposition H allows water 
rates for retail customers to be increased to repay the 
money borrowed through the issuance of bonds by the 
City for improvements to the water system approved by 
the voters in November 1997. As previously noted, such 
rate increases cannot exceed a total of 18 percent between 
July 1, 1998 and July 1, 2006 under Proposition H. In 
November of 1997, San Francisco voters approved 
$304,000,000 in Water Revenue Bonds. Of that amount, 
8140,000,000 in Water Revenue Bonds were sold during 
FY 2001-2002, necessitating an 8.65 percent average rate 
increase for retail customers. The remaining 

$164,000,000 in such Water Revenue Bonds is anticipated 
to be sold during FY 2002-2003, necessitating the 
proposed 8.6 percent average rate increase for retail 
customers. The 8.65 percent rate increase in FY 2001- 
2002, combined with a further 8.6 percent increase in FY 
2002-2003 on the increased base rate, would result in a 
compounded cumulative increase of 17.99 percent for 
retail customers over a two-year period. However, 
because of Proposition H, as previously noted, and 
because all Water Revenue Bonds will have been sold, 
further retail rate increases are not allowed with respect 
to the 1997 Bonds. 

Debt service costs in FY 2002-2003 are projected to be 
$39,459,000, comprising (a) $29,306,958 for existing 
bonds, and (b) $10,152,042 for the additional 
$164,000,000 in Water Revenue Bonds issued during FY 
2002-2003. 

Board of Supervisors 
Budget Analyst 

39 



Memo to Finance Committee 

June 5. 2002 Finance Committee Meeting 



Attachment I to this report shows projected revenues and 
expenditures for FY 2002-2003 under existing rates for 
both retail and Suburban Resale customers. Attachment 
II to this report shows projected revenues and 
expenditures for FY 2002-2003 under the -proposed rates 
for both retail and Suburban Resale customers which 
includes the 8.6 percent average rate increase for retail 
customers. 

Attachments I and II show projected revenue from the 
sale of water to retail customers of $70,881,000 from 
retail customers under existing rates and $76,977,000 
under proposed rates, an increase of S6, 096, 000 or 
approximately 8.6 percent. Also, under existing rates, the 
PUC estimates that the unappropriated surplus would 
decrease from $58,769,000 to $37,683,000, a reduction of 
$21,086,000 or approximately 35.9 percent. Under the 
proposed rates, the PUC estimates that the 
unappropriated surplus would decrease from $58,769,000 
to $43,779,000, a reduction of 214,990,000 or 
approximately 25.5 percent. The PUC recommends an 
unappropriated fund balance of approximately 
$44,000,000 as a prudent financial surplus balance to 
provide for (a) emergency repairs, (b) fluctuations in 
revenue collections, and (c) preservation of a favorable 
credit rating. 

The table on the following page, provided by the PUC, 
shows a comparison of typical monthly water bills for 
residential and commercial retail customers under 
existing rates and the proposed rates after an increase 
that averages 8.6 percent. As previously noted, the 
percentage increase for different customers can vary 
slightly due to the need to round charges to the nearest 
whole cent. 



Board of Supervis 
Budget Analyst 

40 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 

COMPARISON OF TYPICAL MONTHLY WATER BILLS TO RETAIL CUSTOMERS 







SINGLE 


MULTI- 






DATE 


FAMILY 


FAMILY 


COMMERCIAL 


WATER PROVIDER 


ADOPTED 


RESIDENTIAL 1 


RESIDENTIAL/ 


RETADL 3 


San Francisco Existing Rate 


7/1/01 


13.29 


42.40 


122.90 


San Francisco Proposed Rate 


7/1/02 


14.43 


46.10 


133.60 


Alameda County Water District 


1/1/02 


16.19 


45.69 


149.93 


Contra Costa Water District 


2/1/02 


33.93 


78.32 


394.90 


Daly City 


7/1/99 


16.83 


77.53 


213.21 


East Bay Municipal Utilities 


7/1/01 


17.59 


56.94 


154.52 


District 










Hay-ward 


10/1/01 


16.24 


52.20 


173.05 


Marin Municipal Water District 


6/1/01 


23.56 


65.14 


169.04 


Palo Alto 


7/1/00 


18.37 


53.72 


144.45 


San Jose (Zone 3) 


7/1/01 


15.44 


51.46 


138.50 


City of Sants Clara 


7/1/01 


9.68 


27.66 


69.15 



Based on 5/8" meter and monthly use of 700 cubic feet of water 

Based on 1-1/2" meter and monthly use of 2,000 cubic feet of water for four dwelling units 

Based on 3" meter and monthly use of 5,000 cubic feet of water 

As shown in the table above, both existing and proposed 
rates for the City retail customers are lower than all other 
Cities and water districts with the exception of the City of 
Santa Clara for single family residences and commercial 
establishments, and the exception of the City of Santa 
Clara and the Alameda County Water District for multi- 
family residences. 



Comment: 



In accordance with the revenue requirements for Water 
Revenue Bonds, net revenues in each Fiscal Year must be 
equal to at least 1.25 times more than the revenue bond 
annual debt service due in that fiscal year (commonly 
known as the required debt service coverage ratio). Based 
on the PUC's recommended rate increase of 8.6 percent 
for retail customers and no rate increase for Suburban 
Resale Customers, the projected debt service coverage at 



Board of G.pervisors 
Budget Analyst 



Memo to Finance Committee 

June 5, 2002 Finance Committee Meeting 



Recommendation: 



cc: Supervisor Peskin 
Supervisor Daly 
President Ammiano 
Clerk of the Board 
Controller 
Ben Rosenfield 
Ted Lakey 



the end of FY 2001-2002 would be 2.62 2 , or 1.37 above the 
required debt service coverage ratio of 1.25. By 
comparison, if the retail water rates stayed the same, 
debt service coverage would decrease to 2.47 in FY 2002- 
2003 3 , which is 1.22 above the required debt service 
coverage ratio of 1.25. A comparison of estimated retail 
customer revenues for FY 2002-2003 of $70,881,000 under 
existing rates to the estimated revenues of $76,977,000 
under the proposed rates indicates the Water Department 
is able to meet the debt service coverage requirement 
specified in the Water Department's bond indenture, but 
is not able to meet the cash requirements of the water 
system without using the unappropriated surplus balance 
to supplement current revenues. This is illustrated by 
the fact that, even under the proposed retail water rates, 
the Water Department's total projected revenues of 
$169,919,000 are less than its total projected operating 
and debt service costs of $184,909,000, as shown in 
Attachment II. 

Approve the proposed ordinance. 




ffarvey M. Rose 



2 This calculation is shown on page 23 of the Report on Water Rates for Fiscal Year 2003 : published 
by the PUC on April 23, 2002. 

3 This calculation is shown on page 13 of the Report on Water Rates for Fiscal Year 2003, published 

by the PUC on April 23, 2002. 

Board of Supervisors 

Budget Analyst 

42 



Attachment I 



PROJECTION OF REVENUES UNDER EXISTING RATES 

FISCAL YEAR 2002-2003 

($000) 





CITY 


SUBURBAN 


TOTAL 


AVAILABLE FUNDS 








Unappropriated Surplus 7/1 


$58,769 




$58,769 


Balancing Account 


(8,113) 


$8,113 




Revenues from Sale of Water 


70,881 


77,779 


148,660 


Rents 


8,000 




8,000 


Interest Income 


3,561 




3,561 


Miscellaneous 


3,602 




3,602 


Total Revenues 


86,044 
■'"• $136/700- 


77,779 
$85,892 


163,823 


TotaTAvailable Funds 


VJS222,592 


APPLICATION OF FUNDS 




Operating Expenses 


$97,611 


$47,839 


$145,450 


Debt Service 


39,459 

: $137,070 


$47,839/ 


39,459 

-$184,909 


Subtotal Expenditures 


Suburban Depreciation 


$(16,744) 


$16,744 




Expense 








Suburban Return 


(20,786) 


20,786 




Interest 


487 


(487) 




TofaI r Application of Funds 


$100,027 


$84,882- 


: S184 909 
$37,683 


Unappropriated Balance 6/30 


$36,673 


31,010 



43 



Source: Public Utilities Commission 



Attachment 



PROJECTION OF REVENUES UNDER PROPOSED RATES 

FISCAL YEAK 2002-2003 

(S000) 





CITY 


SUBURBAN 


TOTAL 


AVAILABLE FUNDS 








Unappropriated Surplus 7/1 


$58,769 




$58,769 


Balancing Account 


(8,113) 


$8,113 




Revenues from Sale of Water 


76,977 


77,779 


154,756 


Rents 


8,000 




8,000 


Interest Income 


3,561 




3,561 


Miscellaneous 


3,602 




3,602 


Total Revenues 
Total" Available Funds . . 


90,140 
; . '$I42;796 : - 


77,779 
$85,892' 


169,919 

SIP 688 


APPLICATION OF FUNDS 








Operating Expenses 


$97,611 


$47,839 


$145,450 


Debt Service 


39,459 




39,459 


Subtotal Expenditures 


$137,070 


$47,839 


-$184,909 


Suburban Depreciation 


$(16,744) 


$16,744 




Expense 








Suburban Return 


(20,786) 


20,786 




Interest 


487 


(487) 




Total Application of Funds 


$100,027 


$84,882 


\ $184,909 
$43,779 


Unappropriated Balance 6/30 


$42,769 


$1,010 



H 



Source: Public Utilities Commission 




/a/ox 



City and County of San Francisco 

fleeting Agenda 
Finance Committee 

Members: Supervisors Aaron Peskin and Chris Daly 
Clerk: Gail Johnson 



City Hall 
1 Dr. Carlton B Goodlett Place 
San Francisco, CA 94102-4689 



Wednesday, June 12, 2002 



12:30 PM 
Regular Meeting 



City Hall, Room 263 



Note: Each item on the Consent or Regular agenda may include the following documents: 

1) Legislation 

2) Budget Analyst report 

3) Legislative Analyst report 

4) Department or Agency cover letter and/or report 

5) Public correspondence 

These items will be available for review at City Hall, Room 244, Reception Desk. 



Each member of the public will be allotted the same maximum number of minutes to speak as set by 
the Chair at the beginning of each item, excluding City representatives, except that public speakers 
using translation assistance will be allowed to testify for twice the amount of the public testimony 
time limit. If simultaneous translation services are used, speakers will be governed by the public 
testimony time limit applied to speakers not requesting translation assistance. 

DOCUMENTS DEPT. 



AGENDA CHANGES 



REGULAR AGENDA 



JUN 1 2002 

SAN FRANCISCO 
PUBLIC LIBRARY 



020842 [Competitive Bid and Prevailing Wage Exemption for Job Training] 
Supervisor Maxwell 

Ordinance exempting the San Francisco Conservation Corps from the prevailing wage requirements 
and waiving the competitive bid requirements for the recreation and Park Commission's award of a 
contract for construction of playgrounds, restoration of natural areas and implementation of erosion 
control measures in San Francisco parks. 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee 

5/29/02, CONTINUED. Heard in Committee. Speakers: Marvin Yee. Recreation and Park Department, Harvey Rose, Budget 

Analyst; Anne Cochran, Executive Director, San Francisco Conservation Corps. 

Continued to 6/5/02 

6/5/02, CONTINUED. Speakers: None. 

Continued to 6/12/02. 



City and County of San Francisco 



Printed at 1:44 I'M on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



020853 [Veterans Building General Obligation Bonds] 
Supervisors Sandoval, Daly 

Resolution determining and declaring that the public interest and necessity demand municipal 
improvements consisting of the acquisition, rehabilitation, renovation, improvement, construction 
and/or reconstruction by the City and County of San Francisco of the San Francisco War Memorial 
Veterans Building, and all other works, property and structures necessary or convenient for the 
foregoing purposes; that the estimated cost of $98,100,000 for said municipal improvements is and 
will be too great to be paid out of the ordinary annual income and revenue of said City and County 
and will require the incurring of bonded indebtedness; finding the project shall comply with the 
Secretary of the Interior's guidelines; finding the proposed project is in conformity with the priority 
policies of Planning Code Section 101.1(b) and with the General Plan consistency requirement of 
Administrative Code Section 2A.53. 

(Fiscal impact.) 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee. 

6/5/02, CONTINUED. Heard in Committee. Speakers: Tom Home, President, War Memorial Board of Trustees; Beth 
Murray. Managing Director, War Memorial Board; Mort Raphael, San Francisco Performing Arts Library and Museum; 
Sydney Goldstein, Executive Director, City Arts and Lectures; Herman Berlandt, National Poetry Association; Deborah 
Walker; Jim Haas, Chairman, Civic Pride; Tilly Abbe, Ballet With Miss Tilly; Male Speaker; Vince Rios; Wallace Levin, 
Veterans Affairs Commission; Lorna Silberman. Colonel Robert Frank. U.S. Air Force (Retired); Nancy Peterson, President. 
United Nations Association of San Francisco; Jack Trad; Jerome Sapiro, Jr.; Merv Silverberg; Richard Ceras; Jim Buker, 
Department of Public Works; Monique Moyer, Mayor's Office of Public Finance. 
Continued to 6/ 12/02 



020854 [Veterans Building Lease Revenue Bonds] 
Supervisors Sandoval, Daly 

Resolution of the Board of Supervisors submitting to the qualified electors of the City and County of 
San Francisco a proposition authorizing the construction of additional improvements and renovations 
to the San Francisco War Memorial Veterans Building using lease financing in the amount of 
$39,400,000; finding the proposed project is in conformity with the priority policies of Planning Code 
Section 101.1(b) and with the General Plan Consistency requirement of Administrative Code Section 
2A.53; finding the project shall comply with the Secretary of the Interior's guidelines. 

(Fiscal impact.) 

5/20/02. RECEIVED AND ASSIGNED to Finance Committee. 

6/5/02. AMENDED Heard in Committee. Speakers: Tom Home, President, War Memorial Board of Trustees; Beth Murray, 

Managing Director, War Memorial Board; Mort Raphael, San Francisco Performing Arts Library and Museum; Sydney 

Goldstein, Executive Director, City Arts and Lectures; Herman Berlandt, National Poetry Association; Deborah Walker; Jim 

Haas, Chairman, Civic Pride; Tilly Abbe, Ballet With Miss Tilly; Male Speaker; Vince Rios; Wallace Levin, Veterans Affairs 

Commission; Lorna Silberman; Colonel Robert Frank, U.S. Air Force (Retired); Nancy Peterson. President. United Nations 

Association of San Francisco; Jack Trad; Jerome Sapiro, Jr ; Merv Silverberg; Richard Ceras; Jim Buker, Department of 

Public Works; Monique Moyer, Mayor's Office of Public Finance. 

Amended on page 1. line 6, after "financing," by adding "in the amount of $39,400,000 " 

Continued 10 6/12/02. 

6/5/02, CONTINUED. 



OVy and County of San Francisco 



Printed at 1 .44 PM on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



020856 [Pedestrian Safety and Livable Streets General Obligation Bonds] 
Supervisor A mini a no 

Resolution determining and declaring that the public interest and necessity demand the financing of 
street resurfacing, curb ramp construction, sidewalk improvement and street structure improvement 
projects, street signal and fire alarm call box improvement projects, street improvements for bicycle 
use and all other structures and improvements necessary or convenient for the foregoing purposes, that 
the estimated cost of $ 1 50,000,000 is and will be too great to be paid out of the ordinary annual 
income and revenue of said City and County and will require the incurring of a bonded indebtedness; 
finding the proposed project is in conformity with the priority policies of Planning Code Section 
101.1(b) and with the General Plan consistency requirement of Administrative Code Section 2A.53. 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee 
6/5/02, CONTINUED Speakers: None 
Continued to 6/1 2/02. 



020892 [Mortgage Revenue Bonds] 
Mayor 

Resolution declaring the intent of the City and County of San Francisco (the "City") to reimburse 
certain expenditures from proceeds of future indebtedness; authorizing the Director of the Mayor's 
Office of Housing (the "Director") to submit an application and related documents to the California 
Debt Limit Allocations Committee to permit the issuance of qualified mortgage bonds in an amount 
not to exceed $19,000,000; authorizing the Mayor's Office of Housing to direct the Controller's Office 
to hold in trust an amount not to exceed $95,000; authorizing the Director to certify that the City has 
on deposit the required amount; authorizing the Mayor's Office of Housing to pay an amount equal to 
the deposit to the State of California if the City fails to issue the qualified mortgage bonds; and 
authorizing and directing the execution of any documents necessary to implement this Resolution and 
of any documents necessary to implement this Resolution; and ratifying and approving any action 
heretofore taken in connection with the Project (as defined herein) and the application. (Mayor) 

5/21/02. RECEIVED AND ASSIGNED to Finance Committee. 
6/5/02, CONTINUED. Speakers: None. 
Continued to 6/1 2/02. 



020996 [MOU Building Inspectors Association (Class 6334)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Building Inspectors' Association 
(Class 6334) by appending a Letter of Agreement concerning the City's 2002-2003 budget which 
provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 



City and County of San Francisco 



Printed at 1 .44 I'M on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12. 2002 



020997 [MOU, Automotive Machinists Union, Local 1414] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Automotive Machinists, Local 
1414 by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: 
(a) for the City to reduce its "pick-up" of the required employee contribution to the retirement system 
by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% 
base wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal 
year 2002-2003 for employees represented by participating employee organizations (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



020998 [MOU, Bricklayers, Local 3] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Bricklayers, Stone Masons, 
Terrazo Mechanics, Marble Masons, Pointers, Caulkers and Cleaners, Local 3 and Hodcarriers, Local 
36 by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides; (a) 
for the City to reduce its "pick-up" of the required employee contribution to the retirement system by 
2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 
2002-2003 for employees represented by participating employee organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



020999 [MOU, Building Inspectors Association (Class 6331, 6333)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Building Inspectors' Association 
(Class 6331, Class 6333) by appending a Letter of Agreement concerning the City's 2002-2003 
budget which provides: (a) for the City to reduce its "pick-up" of the required employee contribution 
to the retirement system by 2.75% of the employees' compensation effective July 1. 2002 through 
June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no 
layoff commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



10. 021000 [MOU, Carpenters, Local 22] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Carpenters, Local 22 by appending 
a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to 
reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase 
effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for 
employees represented by participating employee organizations (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee 



City and County of San Francisco 



Printed at 1:45 PM on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



11. 021001 [MOU, Cement Masons, Local 580] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Cement Masons, Local 580 by 
appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the 
City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% 
of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage 
increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002- 
2003 for employees represented by participating employee organizations 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee 



12. 021002 [MOU, Deputy Probation Officers Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the San Francisco Deputy Probation 
Officers' Association by appending a Letter of Agreement concerning the City's 2002-2003 budget 
which provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



13. 021003 [MOU, Deputy Sheriff's Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Deputy Sheriffs' Association of San 
Francisco, Inc. by appending a Letter of Agreement concerning the City's 2002-2003 budget which 
provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 



14. 021004 [MOU, District Attorney Investigators Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the San Francisco District Attorney 
Investigators Association by appending a Letter of Agreement concerning the City's 2002-2003 
budget which provides: (a) for the City to reduce its "pick-up" of the required employee contribution 
to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 through 
June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no 
layoff commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee 



City and County of San Francisco 



I'rinted at 1 .45 I'M on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



15. 021005 [MOU, Electrical Workers, Local 6] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the International Brotherhood of 
Electrical Workers, Local 6, American Federation of Labor, by appending a Letter of Agreement 
concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of the 
required employee contribution to the retirement system by 2.75% of the employees' compensation 
effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of business 
June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



16. 021006 [MOU, Firefighters, Local 798 (Unit 1)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the San Francisco Fire Fighters Union, 
Local 798 IAFF, AFL-CIO, Unit 1 by appending a Letter of Agreement concerning the City's 2002- 
2003 budget which provides: (a) for the City to reduce its "pick-up" of the required employee 
contribution to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 
through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) 
a no layoff commitment in fiscal year 2002-2003 for employees represented by participating 
employee organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



17. 021007 [MOU, Firefighters, Local 798 (Unit II)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the San Francisco Fire Fighters Union, 
Local 798 IAFF, AFL-CIO, Unit 2 by appending a Letter of Agreement concerning the City's 2002- 
2003 budget which provides: (a) for the City to reduce its "pick-up" of the required employee 
contribution to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 
through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) 
a no layoff commitment in fiscal year 2002-2003 for employees represented by participating 
employee organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



18. 021008 [MOU, Glaziers, Local 718] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Glaziers, Architectural Metal and 
Glass Workers, Local 718, by appending a Letter of Agreement concerning the City's 2002-2003 
budget which provides: (a) for the City to reduce its "pick-up" of the required employee contribution 
to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 through 
June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no 
layoff commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



City and County of San Francisco 



Printed at 1:45 PM on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



19. 021009 [MOU, Hod Carriers, Local 36] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Hod Carriers, Local 36, by 
appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the 
City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% 
of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage 
increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002- 
2003 for employees represented by participating employee organizations (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee 



20. 021010 [MOU, Institutional Police Officers Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the San Francisco Institutional Police 
Officers' Association by appending a Letter of Agreement concerning the City's 2002-2003 budget 
which provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



21. 021011 [MOU, IATSE, Local 16] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the International Alliance of Theatrical 
Stage Employees, Local 16 by appending a Letter of Agreement concerning the City's 2002-2003 
budget which provides: (a) for the City to reduce its "pick-up" of the required employee contribution 
to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 through 
June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no 
layoff commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



22. 021012 [MOU, Ironworkers, Local 377] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the International Association of 
Bridge, Structural Ornamental, Reinforced Iron Workers, Riggers and Machinery Movers. Local 377 
by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for 
the City to reduce its "pick-up" of the required employee contribution to the retirement system by 
2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 
2002-2003 for employees represented by participating employee organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



City and County of San Francisco 



Printed at 1 :46 PM on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



23. 021013 [MOU, Laborers Union, Local 261] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Laborers International Union, 
Local 261 by appending a Letter of Agreement concerning the City's 2002-2003 budget which 
provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30. 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee 



24. 021014 [MOU, Municipal Attorneys' Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Municipal Attorneys' Association 
of San Francisco by appending a Letter of Agreement concerning the City's 2002-2003 budget which 
provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



25. 021015 [MOU, Municipal Executives' Association (Misc)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the San Francisco Municipal 
Executives' Association (Misc.) by appending a Letter of Agreement concerning the City's 2002-2003 
budget which provides: (a) for the City to reduce its "pick-up" of the required employee contribution 
to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 through 
June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no 
layoff commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 



26. 021016 [MOU, Municipal Executives' Association (Police)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the San Francisco Municipal 
Executives' Association (Police Management) by appending a Letter of Agreement concerning the 
City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of the required 
employee contribution to the retirement system by 2.75% of the employees' compensation effective 
July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 
2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee 



City and County of San Francisco 



Printed at 1:46 PM on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



27. 021017 [MOU, Municipal Executives' Association (Fire)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the San Francisco Municipal 
Executives' Association (Fire Management) by appending a Letter of Agreement concerning the City's 
2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of the required employee 
contribution to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 
through June 30, 2003; (b) a 1% base wage increase effective close of business June 30. 2003 and; (c) 
a no layoff commitment in fiscal year 2002-2003 for employees represented by participating 
employee organizations. 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee 



28. 021018 [MOU, Pile Drivers, Local 34] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Pile Drivers, Divers, Carpenters, 
Bridge, Wharf and Dock Builders, Local 34 by appending a Letter of Agreement concerning the City's 
2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of the required employee 
contribution to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 
through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) 
a no layoff commitment in fiscal year 2002-2003 for employees represented by participating 
employee organizations. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 



29. 021019 [MOU, Plasterers, Local 66] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Plasterers' and Shophands', Local 
66 by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) 
for the City to reduce its "pick-up" of the required employee contribution to the retirement system by 
2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 
2002-2003 for employees represented by participating employee organizations. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 



30. 021020 [MOU, Operating Engineers, Local 3] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Operating Engineers Local Union 
No. 3 of the International Union of Operating Engineers, AFL-CIO by appending a Letter of 
Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its 
"pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for 
employees represented by participating employee organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



City and County of San Francisco 



Printed at 1:4b I'M 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



31. 021021 [MOU, Painters Union, LocaU] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Painters Union District Council #8 
for Local 4 by appending a Letter of Agreement concerning the City's 2002-2003 budget which 
provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



32. 021022 [MOU, Plumbers, Local 38] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the United Association of Journeymen 
and Apprentices of the Plumbing and Pipe Fitting Industry, Local #38 by appending a Letter of 
Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its 
"pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for 
employees represented by participating employee organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



33. 021023 [MOU, Police Officers Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the San Francisco Police Officers' 
Association (SFPOA) by appending a Letter of Agreement concerning the City's 2002-2003 budget 
which provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 



34. 021024 [MOU, IFPTE, Local 21] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the International Federation of 
Professional and Technical Engineers, Local 21 AFL-CIO by appending a Letter of Agreement 
concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of the 
required employee contribution to the retirement system by 2.75% of the employees' compensation 
effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of business 
June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



City and County of San Francisco 



Printed at 1:46 PM on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



35. 021025 [MOU, Roofers, Local 40] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the United Union of Roofers, 
Waterproofers and Allied Workers, Local 40 by appending a Letter of Agreement concerning the 
City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of the required 
employee contribution to the retirement system by 2.75% of the employees' compensation effective 
July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 
2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee 



36. 021026 [Union of American Physicians and Dentists (Unit 1 1 - A A » ] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Union of American Physicians and 
Dentists (Unit 1 1-AA) by appending a Letter of Agreement concerning the City's 2002-2003 budget 
which provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 



37. 021027 [MOU, Sheet Metal Workers, Local 104] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Sheet Metal Workers International 
Union, Local 104 by appending a Letter of Agreement concerning the City's 2002-2003 budget which 
provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 



38. 021028 [MOU, Amendment No. 2, IFPTE, Local 21] 

Ordinance adopting and implementing Amendment No. 2 to the Memorandum of Understanding 
between the International Federation of Professional and Technical Engineers, Local 2 1 AFL-CIO and 
the City and County of San Francisco pursuant to an arbitration award providing for a wage 
adjustment for employees assigned to classification 5212 (Principal Engineer), administrative leave 
for employees assigned to classification 5212 (Principal Engineer), and reimbursement of certain 
benefits no longer available to employees assigned to classifications 1888 (Resource Efficiency and 
Energy Conservation Manager), 2978 (Contract Compliance Officer II), 5212 (Principal Engineer), 
and 9386 (Senior Property Manager, Port), effective July 1, 2002. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee 



City and County of San Francisco 



Printed at 1:47 I'M on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



39. 021029 [MOU, Sanitary Truck Drivers and Helpers, Teamsters, Local 350] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Sanitary Truck Drivers and 
Helpers, Teamsters, Local 350 by appending a Letter of Agreement concerning the City's 2002-2003 
budget which provides: (a) for the City to reduce its "pick-up" of the required employee contribution 
to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 through 
June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no 
layoff commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee 



40. 021030 [MOU, Stationary Engineers, Local 39] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the International Union of Operating 
Engineers, Stationary Engineers, Local 39 by appending a Letter of Agreement concerning the City's 
2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of the required employee 
contribution to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 
through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) 
a no layoff commitment in fiscal year 2002-2003 for employees represented by participating 
employee organizations. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED io Finance Committee. 



41. 021031 [MOU, Supervising Probation Officers Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Operating Engineers, Local 3 
Bargaining for Supervising Probation Officers by appending a Letter of Agreement concerning the 
City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of the required 
employee contribution to the retirement system by 2.75% of the employees' compensation effective 
July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 
2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



42. 021032 [MOU, Supervising Registered Nurses, Teamsters Local 856] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Teamsters Local 856 for 
Supervising Nurses by appending a Letter of Agreement concerning the City's 2002-2003 budget 
which provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee 



City and County of San Francisco 



12 



Printed at 1:47 PM on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



43. 021033 [MOU, Teamsters, Local 853] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Teamsters, Local 853 by appending 
a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to 
reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1. 2002 through June 30, 2003; (b) a 1% base wage increase 
effective close of business June 30. 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for 
employees represented by participating employee organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



44. 021034 [MOU, Teamsters, Local 856 (Multi-Unit)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Teamsters. Local 856 (Multi-Unit) 
by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for 
the City to reduce its "pick-up" of the required employee contribution to the retirement system by 
2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 
2002-2003 for employees represented by participating employee organizations. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 



45. 021035 [MOU, Transport Workers Union, Local 200 (SEAM)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Transport Workers Union of 
America, Local 200 (SEAM) by appending a Letter of Agreement concerning the City's 2002-2003 
budget which provides: (a) for the City to reduce its "pick-up" of the required employee contribution 
to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 through 
June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no 
layoff commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



46. 021036 [MOU, Transport Workers Union , Local 250-A (7410)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Transport Workers Union of 
America, Local 250-A (7410's) by appending a Letter of Agreement concerning the City's 2002-2003 
budget which provides: (a) for the City to reduce its "pick-up" of the required employee contribution 
to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 through 
June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no 
layoff commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 



City and County of San Francisco 



Printed at I :J7 F\l on 6/6/02 



Finance Committee 



Meeting Agenda 



Wednesday, June 12, 2002 



47. 021037 [MOU, Transport Workers Union, Local 250-A (Misc.)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Transport Workers Union of 
America, Local 250-A (Misc.) by appending a Letter of Agreement concerning the City's 2002-2003 
budget which provides: (a) for the City to reduce its "pick-up" of the required employee contribution 
to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 through 
June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no 
layoff commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee 



48. 021038 [MOU, Union of American Physicians and Dentists (Unit 8-CC)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining 
Agreement between the City and County of San Francisco and the Union of American Physicians and 
Dentists (Unit 8-CC) by appending a Letter of Agreement concerning the City's 2002-2003 budget 
which provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the 
retirement system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 
2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee 
organizations. (Mayor) 

6/3/02. RECEIVED AND ASSIGNED to Finance Committee. 



49. 020778 [Official Advertising] 

Resolution designating the San Francisco Independent to be the official newspaper of the City and 
County of San Francisco for the category of non-consecutive day official advertising, for the fiscal 
year commencing July 1, 2002 and ending June 30, 2003. (Purchaser) 

5/15/02, RECEIVED AND ASSIGNED to Finance Committee. 



50. 020779 [Outreach Advertising] 

Resolution designating the Asian Week to be outreach newspaper of the City and County of San 
Francisco for the Chinese community and El Reportero to be outreach newspaper of the City and 
County of San Francisco for the Hispanic community, for outreach advertising for the fiscal year 
commencing July 1, 2002 and ending June 30, 
2003. (Purchaser) 

5/15/02. RECEIVED AND ASSIGNED to Finance Committee. 



City and County of San Francisco 



14 



Printed at 1:48 PM on 6/6/02 



Finance Committee Meeting Agenda Wednesday, June 12, 2002 



SPECIAL ORDER - 2:00 PM 



51. 020889 [San Francisco Business Tax] 

Supervisor Peskin 

Hearing to address reform of the San Francisco Business Tax to ensure that the City's tax ordinance 
distributes tax burden among San Francisco businesses in a fair and equitable manner. This hearing is 
intended to assess the City's current tax collection in the wake of the Gross Receipts Tax Lawsuit and 
appropriate alternatives that exist to amend the tax code. 

5/20/02. RECEIVED AND ASSIGNED to Finance Committee. Sponsor requests this item be scheduled for consideration at a 

Special Meeting of the Finance Committee on June 5. 2002 at 12:30 PM 

6/5/02. CONTINUED Heard in Committee Speakers: Edward Harrington, Controller; Dr Richard Pomp. Dr Steven 

Sheffrin; Bruce Allison; Marc Norton; Ken Cleveland, Business Owners and Managers Association; Kathleen Harrington. 

Golden Gate Restaurant Association; Male Speaker; Carl Kramer. San Francisco Living Wage Coalition; Robert Baezly; 

Margaret Brodkin. Coleman Advocates for Children; Gary Kaplan, Chair of Taxation Section, Bar Association of San 

Francisco; Deborah Monroe; Paul Kumar, Health Care Workers Union; Robert Haaland. Harvey Milk LGBT Democratic 

Club; Rebecca Vilmerkerson. People's Budget; Supervisor McGoldrick; Eileen Griffin, Property Manager, Equity Office 

Properties; Nathan Nayman, Executive Committee on Jobs; Barry Hermanson; Jim Mathias, San Francisco Chamber of 

Commerce 

Continued to 6/12/02, as a Special Order at 2:00 p.m. 

ADJOURNMENT 



IMPORTANT INFORMATION 

NOTE: Persons unable to attend the meeting may submit to the City, by the time the proceeding 
begins, written comments regarding the agenda items above. These comments will be made a part of 
the official public record and shall be brought to the attention of the Board of Supervisors. Any 
written comments should be sent to Committee Clerk, Finance Committee, San Francisco Board of 
Supervisors, I Dr. Carlton B. Goodlett Place, Room 244, San Francisco, California 94102 by 5:00 
p.m. on the day prior to the hearing. Comments which cannot be delivered to the committee clerk by 
that time may be taken directly to the hearing at the location above. 



LEGISLATION UNDER THE 30-DAY RULE 



(Not to be considered at this meeting) 

Rule 5.42 provides that when an ordinance or resolution is introduced which would CREATE OR 
REVISE MAJOR CITY POLICY, the committee to which the legislation is assigned shall not consider 
the legislation until at least thirty days after the date of introduction. The provisions of this rule shall 
not apply to the routine operations of the departments of the City or when a legal time limit controls 
the hearing timing. In general, the rule shall not apply to hearings to consider subject matter when 
no legislation has been presented, nor shall the rule apply to resolutions which simply URGE action 
to be taken. 



There are no items now pending under the 30-day rule. 



City and County of San Francisco 15 Printed at 1 :48 PM on 6/6/02 



Finance Committee Meeting Agenda Wednesday, June 12, 2002 

Meeting Procedures 

The Board of Supervisors is the Legislative Body of the City and County of San Francisco. The Board has 

several standing Committees where ordinances and resolutions are the subject of hearings at which members of 

the public are urged to testify. The full Board does not hold a second public hearing on measures which have 

been heard in committee. 

Board procedures do not permit: 1) persons in the audience at a Committee meeting to vocally express support 

or opposition to statements by Supervisors or by other persons testifying; 2) ringing and use of cell phones, 

pagers, and similar sound-producing electronic devices; 3) signs to be brought into the meeting or displayed in 

the room; 4) standing in the meeting room. 

Citizens are encouraged to testify at Committee meetings and to write letters to the Clerk of a Committee or to 

its members. City Hall, 1 Dr. Carlton B. Goodlett Place, Room 244, San Francisco, CA 94102. 

Agenda are available on the internet at www.ci.sf.ca.us/bdsupvrs.bos.htm. 

THE AGENDA PACKET IS AVAILABLE FOR REVIEW AT CITY HALL, ROOM 244, RECEPTION DESK. 

Board meetings are televised on channel 26. For video tape copies and scheduling call (415) 557-4293. 

Requests for language translation at a meeting must be received no later than noon the Friday before the 

meeting. Contact Ohn Myint at (415) 554-7704. 

AVISO EN ESPANOL: La solicitud para un traductor en una reunion debe recibirse antes de mediodia de el 

viemes anterior a la reunion. Llame a Erasmo Vazquez (415) 554-4909. 



gfff[ (415) 554-7701 



Disability Access 

Both the Committee Room (Room 263) and the Legislative Chamber are wheelchair accessible. The closest 

accessible BART Station is Civic Center, three blocks from City Hall. Accessible MUNI lines serving this 

location are: #47 Van Ness, and the #71 Haight/Noriega and the F Line to Market and Van Ness and the Metro 

stations at Van Ness and Market and at Civic Center. For more information about MUNI accessible services, 

call 923-6142. 

There is accessible parking in the vicinity of City Hall at Civic Center Plaza and adjacent to Davies Hall and the 

War Memorial Complex. 

The following services are available when requested by 4:00 p.m. of the Friday before the Board meeting: 

For American Sign Language interpreters, use of a reader during a meeting, or sound enhancement system, 
contact Ohn Myint at (415) 554-7704. 

For a large print copy of agenda or minutes in alternative formats, contact Annette Lonich at (415) 554-7706. 
The Clerk of the Board's Office TTY number for speech-hearing impaired is (415) 554-5227. 
In order to accommodate persons with severe allergies, environmental illness, multiple chemical sensitivity or 
related disabilities, attendees at public meetings are reminded that other attendees may be sensitive to various 
chemical based products. 



City and County of San Francisco 16 Printed at 1:48 PM on 6/6/02 



Finance Committee Meeting Agenda Wednesday, June 12, 2002 

Know Your Rights Under the Sunshine Ordinance 

Government's duty is to serve the public, reaching its decisions in full view of the public. Commissions, boards, 
councils and other agencies of the City and County exist to conduct the people's business. The Sunshine 
Ordinance assures that deliberations are conducted before the people and that City operations are open to the 
people's review. For information on your rights under the Sunshine Ordinance (Chapter 67 of the San Francisco 
Administrative Code) or to report a violation of the ordinance, contact Donna Hall; by mail to Sunshine 
Ordinance Task Force, 1 Dr. Carlton B. Goodlett Place, Room 409, by phone at (415) 554-7724, by fax at (415) 
554-7854 or by email at Donna.HalI@sfgov.org 

Citizens may obtain a free copy of the Sunshine Ordinance by contacting Ms. Hall or by printing Chapter 67 of 
the San Francisco Administrative Code on the Internet, at http://www.sfgov.org/bdsupvrs/sunshine.htm 

Lobbyist Registration and Reporting Requirements 

Individuals and entities that influence or attempt to influence local legislative or administrative action may be 
required by the San Francisco Lobbyist Ordinance [SF Campaign & Governmental Conduct Code Sec. 2.100] to 
register and report lobbying activity. For more information about the Lobbyist Ordinance, please contact the 
San Francisco Ethics Commission at 30 Van Ness Avenue, Suite 3900, San Francisco, CA 94102; telephone 
(415) 581-2300; fax (415) 581-2317; web site www.sfgov.org/ethics 



City and County of San Francisco 17 Printed at 1 :48 PSt on 6/6/02 



FINANCE COMMITTEE 

S.F. BOARD OF SUPERVISORS 

CITY HALL, ROOM 244 

1 DR. CARLTON GOODLETT PLACE 

SAN FRANCISCO, CA 94102-4689 

IMPORTANT HEARING NOTICE!!! 



City and County of San Francisco Cit y Ha " 

J J 1 Dr. Carlton B. 

Meeting Minutes Goodiett Place 

San Francisco, CA 

Finance Committee 94102-4689 

Members: Supervisors Aaron Peskin and Chris Daly 

Clerk: Gail Johnson 

Wednesday, June 12,2002 12:30 PM City Hall, Room 263 

Regular Meeting 

Members Present: Aaron Peskin, Chris Daly, Tom Ammiano. 



Supervisor Ammiano appointed himself to serve as a member of the Finance Committee. 

MEETING CONVENED 



The meeting convened at 12:43 p.m. 
020842 [Competitive Bid and Prevailing Wage Exemption for Job Training] 
Supervisor Maxwell 

Ordinance exempting the San Francisco Conservation Corps from the prevailing wage requirements and 

waiving the competitive bid requirements for the Recreation and Park Commission's award of a contract for 

construction of playgrounds, restoration of natural areas and implementation of erosion control measures in San 

Francisco parks. 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee. 

5/29/02, CONTINUED. Heard in Committee. Speakers: Marvin Yee, Recreation and Park Department; Harvey Rose, Budget Analyst, 

Anne Cochran, Executive Director, San Francisco Conservation Corps. 

Continued to 6/5/02 

6/5/02, CONTINUED. Speakers: None. 

Continued to 6/12/02. 

Speakers: None. 

TABLED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco I Printed at 5:.' " PM on .i .' W 



Finance Committee Meeting Minutes June 12, 2002 



020853 [Veterans Building General Obligation Bonds] 
Supervisors Sandoval, Daly 

Resolution determining and declaring that the public interest and necessity demand municipal improvements 
consisting of the acquisition, rehabilitation, renovation, improvement, construction and/or reconstruction by the 
City and County of San Francisco of the San Francisco War Memorial Veterans Building, and all other works, 
property and structures necessary or convenient for the foregoing purposes; that the estimated cost of 
$98,100,000 for said municipal improvements is and will be too great to be paid out of the ordinary annual 
income and revenue of said City and County and will require the incurring of bonded indebtedness; finding the 
project shall comply with the Secretary of the Interior's guidelines; finding the proposed project is in 
conformity with the priority policies of Planning Code Section 101.1(b) and with the General Plan consistency 
requirement of Administrative Code Section 2A.53. 

(Fiscal impact.) 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee. 

6/5/02, CONTINUED. Heard in Committee. Speakers: Thomas Horn, President, War Memorial Board of Trustees; Beth Murray, 

Managing Director, War Memorial Board; Mort Raphael, San Francisco Performing Arts Library and Museum, Sydney Goldstein, 

Executive Director, City Arts and Lectures; Herman Berlandt, National Poetry Association; Deborah Walker; Jim Haas, Chairman, Civic 

Pride; Tilly Abbe, Ballet With Miss Tilly; Male Speaker; Vince Rios; Wallace Levin, Veterans Affairs Commission, Loma Silberman; 

Colonel Robert Frank, U.S. Air Force (Retired); Nancy Peterson, President, United Nations Association of San Francisco; Jack Trad; 

Jerome Sapiro, Jr.; Merv Silverberg; Richard Ceras; Jim Buker, Department of Public Works; Monique Moyer, Mayor's Office of Public 

Finance. 

Continued to 6/12/02. 

Heard in Committee. Speakers: Elizabeth Murray, Managing Director, War Memorial Board; Theodore 
Lakey, Deputy City Attorney; Jerome Sapiro, Jr.; Jim Lineberger; Colonel Robert Frank, President, Air Force 
Association, American Legion Post 333, San Francisco Veterans Coalition; Paul Cox, American Legion War 
Memorial Commission; Marian Kohlstedt, San Francisco Performances; Male Speaker; Richard Ow, 
Chinatown Post, Veterans of Foreign Wars; Major General Robert Menist, Association of U.S. Army; Mr. 
Crowley; Commissioner Vince Rios, Veterans Affairs Commission; Association for Service Disabled Veterans; 
Thomas Horn, President, War Memorial Board of Trustees. 
AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. 

Resolution determining and declaring that the public interest and necessity demand municipal improvements 
consisting of the acquisition, rehabilitation, renovation, improvement, construction and/or reconstruction by the 
City and County of San Francisco of the San Francisco War Memorial Veterans Building, and all other works, 
property and structures necessary or convenient for the foregoing purposes; that the estimated cost of 
$122,755,000 for said municipal improvements is and will be too great to be paid out of the ordinary annual 
income and revenue of said City and County and will require the incurring of bonded indebtedness; finding the 
project shall comply with the Secretary of the Interior's guidelines; finding the proposed project is in 
conformity with the priority policies of Planning Code Section 101.1(b) and with the General Plan consistency 
requirement of Administrative Code Section 2A.53. 

(Fiscal impact.) 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 2 Printed at 5:37 PM on 3/2/04 



Finance Committee Meeting Minutes June 12, 2002 



020854 [Veterans Building Lease Revenue Bonds] 
Supervisors Sandoval, Daly 

Resolution of the Board of Supervisors submitting to the qualified electors of the City and County of San 
Francisco a proposition authorizing the construction of additional improvements and renovations to the San 
Francisco War Memorial Veterans Building using lease financing in the amount of $39,400,000; finding the 
proposed project is in conformity with the priority policies of Planning Code Section 101.1(b) and with the 
General Plan Consistency requirement of Administrative Code Section 2A.53; finding the project shall comply 
with the Secretary of the Interior's guidelines. 

(Fiscal impact.) 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee. 

6/5/02, AMENDED. Heard in Committee. Speakers: Thomas Horn, President, War Memorial Board of Trustees; Beth Murray, 

Managing Director, War Memorial Board; Mort Raphael, San Francisco Performing Arts Library and Museum; Sydney Goldstein, 

Executive Director, City Arts and Lectures; Herman Berlandt, National Poetry Association; Deborah Walker; Jim Haas, Chairman, Civic 

Pride; Tilly Abbe, Ballet With Miss Tilly; Male Speaker; Vince Rios; Wallace Levin, Veterans Affairs Commission; Loma Silberman; 

Colonel Robert Frank, U.S. Air Force (Retired); Nancy Peterson, President, United Nations Association of San Francisco; Jack Trad; 

Jerome Sapiro, Jr.; Merv Silverberg; Richard Ceras; Jim Buker, Department of Public Works; Monique Moyer, Mayor's Office of Public 

Finance. 

Amended on page 1, line 6, after "financing," by adding "in the amount of $39,400,000." 

Continued to 6/12/02. 

6/5/02, CONTINUED AS AMENDED. 

Heard in Committee. Speakers: Elizabeth Murray, Managing Director, War Memorial Board; Theodore 
Lakey, Deputy City Attorney; Jerome Sapiro, Jr.; Jim Lineberger; Colonel Robert Frank, President, Air Force 
Association, American Legion Post 333, San Francisco Veterans Coalition; Paul Cox, American Legion War 
Memorial Commission; Marian Kohlstedt, San Francisco Performances; Male Speaker; Richard Ow, 
Chinatown Post, Veterans of Foreign Wars; Major General Robert Menist, Association of U.S. Army; Mr. 
Crowley; Commissioner Vince Rios, Veterans Affairs Commission; Association for Service Disabled Veterans; 
Thomas Horn, President, War Memorial Board of Trustees. 
TABLED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 3 Printed at 5:3 ~ I'M M 3/2/04 



Finance Committee 



Meeting Minutes 



June 12, 2002 



020856 [Pedestrian Safety and Livable Streets General Obligation Bonds] 
Supervisors Ammiano, McGoldrick 

Resolution determining and declaring that the public interest and necessity demand the financing of street 
resurfacing, curb ramp construction, sidewalk improvement and street structure improvement projects, street 
signal and fire alarm call box improvement projects, street improvements for bicycle use and all other 
structures and improvements necessary or convenient for the foregoing purposes, that the estimated cost of 
$150,000,000 is and will be too great to be paid out of the ordinary annual income and revenue of said City and 
County and will require the incurring of a bonded indebtedness; finding the proposed project is in conformity 
with the priority policies of Planning Code Section 101.1(b) and with the General Plan consistency requirement 
of Administrative Code Section 2A.53. 

(Government Code Sections 43607 and 43608, requires eight votes for passage.) 
5/20/02, RECEIVED AND ASSIGNED to Finance Committee. 
6/5/02, CONTINUED. Speakers: None. 
Continued to 6/12/02. 

Heard in Committee. Speakers: Tina Olson, Department of Public Works; Nick Carr, Department of Parking 
and Traffic; Walter Park, Mayor's Office on Disability; Peter Tannen, Bicycle Program Manager, Department 
of Parking and Traffic; Leah Shea, Co-Chair, Pedestrian Safety and Street Resurfacing Working Group; Ms. 
Lombardi; Pedestrian Safely and Street Resurfacing Working Group; Joe Ovadia, Department of Public 
Works; Monique Moyer, Mayor's Office of Public Finance. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



020892 [Mortgage Revenue Bonds] 
Mayor 

Resolution declaring the intent of the City and County of San Francisco (the "City") to reimburse certain 
expenditures from proceeds of future indebtedness; authorizing the Director of the Mayor's Office of Housing 
(the "Director") to submit an application and related documents to the California Debt Limit Allocations 
Committee to permit the issuance of qualified mortgage bonds in an amount not to exceed $19,000,000; 
authorizing the Mayor's Office of Housing to direct the Controller's Office to hold in trust an amount not to 
exceed $95,000; authorizing the Director to certify that the City has on deposit the required amount; 
authorizing the Mayor's Office of Housing to pay an amount equal to the deposit to the State of California if the 
City fails to issue the qualified mortgage bonds; and authorizing and directing the execution of any documents 
necessary to implement this Resolution and of any documents necessary to implement this Resolution; and 
ratifying and approving any action heretofore taken in connection with the Project (as defined herein) and the 
application. (Mayor) 

5/21/02, RECEIVED AND ASSIGNED to Finance Committee. 
6/5/02, CONTINUED. Speakers: None. 
Continued to 6/12/02. 

Heard in Committee. Joel Lipski, Mayor's Office of Housing. 
RECOMMENDED by the following vote: 

Ayes; 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 



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Finance Committee 



Meeting Minutes 



June 12, 2002 



020996 [MOU Building Inspectors Association (Class 6334)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Building Inspectors' Association (Class 6334) by 
appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to 
reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of 
business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



020997 [MOU, Automotive Machinists Union, Local 1414] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Automotive Machinists, Local 1414 by appending a 
Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its 
"pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of 
business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 



Printed at 5:3' P\t on 3/2/04 



Finance Committee Meeting Minutes June 12, 2002 



020998 [MOU, Bricklayers. Local 3] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Bricklayers, Stone Masons, Terrazo Mechanics, Marble 
Masons, Pointers, Caulkers and Cleaners, Local 3 and Hodcarriers, Local 36 by appending a Letter of 
Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of 
the required employee contribution to the retirement system by 2.75% of the employees' compensation 
effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 
2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by participating 
employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers. Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



020999 |MOU, Building Inspectors Association (Class 6331, 6333)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Building Inspectors' Association (Class 6331, Class 
6333) by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the 
City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa. Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 6 Printed at 5:37 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



June 12, 2002 



021000 [MOU, Carpenters, Local 22] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Carpenters, Local 22 by appending a Letter of 
Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of 
the required employee contribution to the retirement system by 2.75% of the employees' compensation 
effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 
2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by participating 
employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Sendees; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021001 [MOU, Cement Masons, Local 580] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Cement Masons, Local 580 by appending a Letter of 
Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of 
the required employee contribution to the retirement system by 2.75% of the employees' compensation 
effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 
2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by participating 
employee organizations. 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Sendees; Alice Villagomez. Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 



Printed at. 1:3' PM 



Finance Committee Meeting Minutes June 12, 2002 



021002 [MOU, Deputy Probation Officers Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the San Francisco Deputy Probation Officers' Association 
by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City 
to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Sendees; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021003 [MOU, Deputy Sheriffs Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Deputy Sheriffs Association of San Francisco, Inc. by 
appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to 
reduce its "pick-up" of the required employee contribution to the retirement system by 2.15% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of 
business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations (Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 






City and County of San Francisco 8 Printed at 5:38 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



June 12, 2002 



021004 |MOU, District Attorney Investigators Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the San Francisco District Attorney Investigators 
Association by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) 
for the City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of 
the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase 
effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for 
employees represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Ser\'ices; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



021005 [MOU, Electrical Workers, Local 6] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the International Brotherhood of Electrical Workers, Local 
6, American Federation of Labor, by appending a Letter of Agreement concerning the City's 2002-2003 budget 
which provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the retirement 
system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002- 
2003 for employees represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 



Printed at 5:3$ PM on i 2 <>4 



Finance Committee Meeting Minutes June 12, 2002 



02 1 006 [MOU, Firefighters, Local 798 (Unit 1)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the San Francisco Fire Fighters Union, Local 798 IAFF. 
AFL-CIO, Unit 1 by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: 
(a) for the City to reduce its "pick-up" of the required employee contribution to the retirement system by 
2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage 
increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for 
employees represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman. Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



021007 [MOU, Firefighters, Local 798 (Unit TJ)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the San Francisco Fire Fighters Union, Local 798 IAFF, 
AFL-CIO, Unit II by appending a Letter of Agreement concerning the City's 2002-2003 budget which 
provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the retirement 
system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002- 
2003 for employees represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 10 Printed at 5:38 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



June 12, 2002 



021008 [MOU, Glaziers, Local 718] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Glaziers, Architectural Metal and Glass Workers, Local 
718, by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the 
City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021009 [MOU, Hod Carriers, Local 36] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Hod Carriers, Local 36, by appending a Letter of 
Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of 
the required employee contribution to the retirement system by 2.75% of the employees' compensation 
effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of business June 30. 
2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by participating 
employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 



Printed at 5:38 PM on i 2 04 



Finance Committee Meeting Minutes June 12, 2002 



021010 [MOU, Institutional Police Officers Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the San Francisco Institutional Police Officers' Association 
by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City 
to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



021011 [MOU, IATSE, Local 16] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the International Alliance of Theatrical Stage Employees, 
Local 16 by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for 
the City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 12 Printed at 5:38 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



June 12, 2002 



021012 [MOU, Ironworkers, Local 377] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the International Association of Bridge, Structural 
Ornamental, Reinforced Iron Workers, Riggers and Machinery Movers, Local 377 by appending a Letter of 
Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of 
the required employee contribution to the retirement system by 2.75% of the employees' compensation 
effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 
2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by participating 
employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021013 [MOU, Laborers Union, Local 261] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Laborers International Union, Local 261 by appending a 
Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its 
"pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of 
business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsk\\ International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 



13 



Printed at 5:38 PM on ..' 2 114 



Finance Committee Meeting Minutes June 12, 2002 



021014 [MOU, Municipal Attorneys' Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Municipal Attorneys' Association of San Francisco by 
appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to 
reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of 
business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021015 [MOU, Municipal Executives' Association (Misc)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the San Francisco Municipal Executives' Association 
(Misc.) by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for 
the City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 14 Printed at 5:38 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



June 12, 2002 



021016 [MOU, Municipal Executives' Association (Police)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the San Francisco Municipal Executives' Association 
(Police Management) by appending a Letter of Agreement concerning the City's 2002-2003 budget which 
provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the retirement 
system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002- 
2003 for employees represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021017 [MOU, Municipal Executives' Association (Fire)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the San Francisco Municipal Executives' Association (Fire 
Management) by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: 
(a) for the City to reduce its "pick-up" of the required employee contribution to the retirement system by 
2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage 
increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for 
employees represented by participating employee organizations. 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Serx'ices; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 



Printed at 5:39 PM „n 3 2 114 



Finance Committee Meeting Minutes June 12, 2002 



021018 [MOU, Pile Drivers, Local 34] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Pile Drivers, Divers, Carpenters, Bridge, Wharf and 
Dock Builders, Local 34 by appending a Letter of Agreement concerning the City's 2002-2003 budget which 
provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the retirement 
system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002- 
2003 for employees represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021019 [MOU, Plasterers, Local 66] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Plasterers' and Shophands', Local 66 by appending a 
Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its 
"pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of 
business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 16 Printed at 5:39 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



June 12, 2002 



021020 [MOU, Operating Engineers, Local 3] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Operating Engineers Local Union No. 3 of the 
International Union of Operating Engineers, AFL-CIO by appending a Letter of Agreement concerning the 
City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of the required employee 
contribution to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 through 
June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee organizations. 
(Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021021 [MOU, Painters Union, Local 4] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Painters Union District Council #8 for Local 4 by 
appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to 
reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of 
business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Sendees; Alice Villagomez, Employee Relations Division, 

Department of Human Ser\'ices; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 



Printed at 5:.?9 PM 



Finance Committee Meeting Minutes June 12, 2002 



021022 |MOU, Plumbers, Local 38] 

Ordinance adopting and implementing an amendment to the 200 1 -2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the United Association of Journeymen and Apprentices of 
the Plumbing and Pipe Fitting Industry, Local #38 by appending a Letter of Agreement concerning the City's 
2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of the required employee 
contribution to the retirement system by 2.75% of the employees' compensation effective July 1, 2002 through 
June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 2003 and; (c) a no layoff 
commitment in fiscal year 2002-2003 for employees represented by participating employee organizations. 
(Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021023 [MOU, Police Officers Association] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the San Francisco Police Officers' Association (SFPOA) by 
appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to 
reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of 
business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 18 Printed at 5:39 PM on 3/2/04 



Finance Committee Meeting Minutes June 12, 2002 



021024 [MOU,IFPTE, Local 211 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the International Federation of Professional and Technical 
Engineers, Local 21 AFL-CIO by appending a Letter of Agreement concerning the City's 2002-2003 budget 
which provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the retirement 
system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002- 
2003 for employees represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021025 [MOU, Roofers, Local 40] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the United Union of Roofers, Waterproofers and Allied 
Workers, Local 40 by appending a Letter of Agreement concerning the City's 2002-2003 budget which 
provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the retirement 
system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002- 
2003 for employees represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 
6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 19 Printed at 5:39 PM on 3/2/04 



Finance Committee Meeting Minutes June 12, 2002 



021026 [Union of American Physicians and Dentists (Unit 11 -AA)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Union of American Physicians and Dentists (Unit 1 1 - 
AA) by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the 
City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021027 [MOU, Sheet Metal Workers, Local 1 04] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Sheet Metal Workers International Union, Local 104 by 
appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to 
reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of 
business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 20 Printed at 5:39 PM on 3/2/04 



Finance Committee Meeting Minutes June 12, 2002 



021028 [MOU, Amendment No. 2, IFPTE, Local 21] 
Supervisor Daly 

Ordinance adopting and implementing Amendment No. 2 to the Memorandum of Understanding between the 
International Federation of Professional and Technical Engineers, Local 2 1 AFL-CIO and the City and County 
of San Francisco pursuant to an arbitration award providing for a wage adjustment for employees assigned to 
classification 5212 (Principal Engineer), administrative leave for employees assigned to classification 5212 
(Principal Engineer), and reimbursement of certain benefits no longer available to employees assigned to 
classifications 1888 (Resource Efficiency and Energy Conservation Manager), 2978 (Contract Compliance 
Officer II), 5212 (Principal Engineer), and 9386 (Senior Property Manager, Port), effective July 1, 2002. 
(Mayor) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 
Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 
Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 
Engineers, Local 21. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



021 029 [MOU, Sanitary Truck Drivers and Helpers, Teamsters, Local 350] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Sanitary Truck Drivers and Helpers, Teamsters, Local 
350 by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the 
City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 21 Print. -d ai 5:4$ PM M I .' "J 



Finance Committee Meeting Minutes June 12, 2002 



021030 |MOU, Stationary Engineers, Local 39] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the International Union of Operating Engineers, Stationary 
Engineers, Local 39 by appending a Letter of Agreement concerning the City's 2002-2003 budget which 
provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the retirement 
system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002- 
2003 for employees represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021031 [MOU, Supervising Probation Officers Association] 

Ordinance adopting and implementing an amendment to the 200 1 -2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Operating Engineers, Local 3 Bargaining for 
Supervising Probation Officers by appending a Letter of Agreement concerning the City's 2002-2003 budget 
which provides: (a) for the City to reduce its "pick-up" of the required employee contribution to the retirement 
system by 2.75% of the employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base 
wage increase effective close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002- 
2003 for employees represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 22 Printed at 5:40 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



June 12, 2002 



021032 [MOU, Supervising Registered Nurses, Teamsters Local 856] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Teamsters Local 856 for Supervising Nurses by 
appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to 
reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of 
business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021033 [MOU, Teamsters, Local 853] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Teamsters, Local 853 by appending a Letter of 
Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its "pick-up" of 
the required employee contribution to the retirement system by 2.75% of the employees' compensation 
effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of business June 30, 
2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by participating 
employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 



33 



Primed at .Wfl PM on .? 1/04 



Finance Committee Meeting Minutes June 12, 2002 



02 1 034 [MOU, Teamsters, Local 856 (Multi-Unit)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Teamsters, Local 856 (Multi-Unit) by appending a 
Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City to reduce its 
"pick-up" of the required employee contribution to the retirement system by 2.75% of the employees' 
compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective close of 
business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees represented by 
participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021035 [MOU, Transport Workers Union, Local 200 (SEAM)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Transport Workers Union of America, Local 200 
(SEAM) by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for 
the City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 24 Printed at 5:40 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



June 12, 2002 



021036 [MOU, Transport Workers Union , Local 250-A (7410)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Transport Workers Union of America, Local 250-A 
(7410's) by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for 
the City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



021037 [MOU, Transport Workers Union, Local 250-A (Misc.)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Transport Workers Union of America, Local 250-A 
(Misc.) by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for 
the City to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Services; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



City and County of San Francisco 



25 



Prinn'datf:40PM on .? 2 04 



Finance Committee 



Meeting Minutes 



June 12, 2002 



021038 [MOU, Union of American Physicians and Dentists (Unit 8-CC)] 

Ordinance adopting and implementing an amendment to the 2001-2003 Collective Bargaining Agreement 
between the City and County of San Francisco and the Union of American Physicians and Dentists (Unit 8-CC) 
by appending a Letter of Agreement concerning the City's 2002-2003 budget which provides: (a) for the City 
to reduce its "pick-up" of the required employee contribution to the retirement system by 2.75% of the 
employees' compensation effective July 1, 2002 through June 30, 2003; (b) a 1% base wage increase effective 
close of business June 30, 2003 and; (c) a no layoff commitment in fiscal year 2002-2003 for employees 
represented by participating employee organizations. (Mayor) 

(Supervisor Daly dissenting in Committee.) 

6/3/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Steve Kawa, Mayor's Office; Geoffrey Rothman, Director, Employee 

Relations Division, Department of Human Ser\>ices; Alice Villagomez, Employee Relations Division, 

Department of Human Services; David Novogrodsky, International Federation of Professional and Technical 

Engineers, Local 21. 

RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Ammiano 

Noes: 1 - Daly 



020778 [Official Advertising] 

Resolution designating the San Francisco Independent to be the official newspaper of the City and County of 
San Francisco for the category of non-consecutive day official advertising, for the fiscal year commencing July 
1, 2002 and ending June 30, 2003. (Purchaser) 
5/15/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Michael Ward, Assistant Director of Purchasing, Purchasing Division, Office 
of Contract Administration; Marc Chamot; Eddie Rosario, Vice President, Director of Organizing, Graphic 
Communications International Union, Local 4N; Grant Corley; Timm Sinclair; Charles Minster; Walter 
Johnson, San Francisco Labor Council; Denis Mosgofian; Howard Wallace; Theodore Lakey, Deputy City 
Attorney. 

CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



020779 [Outreach Advertising] 

Resolution designating the Asian Week to be outreach newspaper of the City and County of San Francisco for 

the Chinese community and El Reportero to be outreach newspaper of the City and County of San Francisco 

for the Hispanic community, for outreach advertising for the fiscal year commencing July 1 , 2002 and ending 

June 30,2003. (Purchaser) 

5/15/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Michael Ward, Assistant Director of Purchasing, Purchasing Division. Office 

of Contract Administration; Willie Ratcliff, Publisher, San Francisco Bayview; Luis Espinosa, Senior 

Purchaser, Purchasing Division, Office of Contract Administration; Michael Lam, Chairman of the Board, 

Chinese Times; Commissioner Richard Ow; Thomas Sie, President, Chinese Times; Jason Ho, General 

Manager, Chinese Times; Serena Scales, El Mensajero; Carmen Ruiz, El Latino; Diane Perez, Board of 

Supervisors; Theodore Lakey, Deputy City Attorney. 

Amendment of the Whole prepared in Committee. 

AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. 



City and County of San Francisco 



Printed at 5:40 PM on 3/2/04 



Finance Committee Meeting Minutes June 12, 2002 

Resolution designating the Asian Week to be outreach newspaper of the City and County of San Francisco for 
the Chinese community; El Reportero to be outreach newspaper of the City and County of San Francisco for 
the Hispanic community; the Bay Area Reporter to be outreach newspaper of the City and County of San 
Francisco for the Gay/Lesbian/Bisexual/Transgender community; and the San Francisco Bay View to be 
outreach newspaper of the City and County of San Francisco for the African American community, for 
outreach advertising for the fiscal year commencing July 1, 2002 and ending June 30, 2003. (Purchaser) 
CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



SPECIAL ORDER - 2:00 PM 



020889 [San Francisco Business Tax] 
Supervisor Peskin 

Hearing to address reform of the San Francisco Business Tax to ensure that the City's tax ordinance distributes 
tax burden among San Francisco businesses in a fair and equitable manner. This hearing is intended to assess 
the City's current tax collection in the wake of the Gross Receipts Tax Lawsuit and appropriate alternatives that 
exist to amend the tax code. 

5/20/02, RECEIVED AND ASSIGNED to Finance Committee. Sponsor requests this item be scheduled for consideration at a Special 
Meeting of the Finance Committee on June 5, 2002 at 12:30 PM. 

6/5/02, CONTINUED. Heard in Committee. Speakers: Edward Harrington, Controller; Dr. Richard Pomp; Dr. Steven Sheffnn; Bruce 
Allison; Marc Norton; Ken Cleveland, Business Owners and Managers Association; Kathleen Harrington, Golden Gate Restaurant 
Association; Male Speaker; Carl Kramer, San Francisco Living Wage Coalition; Robert Baezly; Margaret Brodkin, Coleman Advocates 
for Children; Gary Kaplan, Chair of Taxation Section, Bar Association of San Francisco; Debra Mugnani Monroe, Monroe Personnel 
Service LLC/Temptime; Paul Kumar, Health Care Workers Union; Robert Haaland, Harvey Milk LGBT Democratic Club; Rebecca 
Vilmerkerson, People's Budget; Supervisor McGoldrick; Eileen Griffin, Property Manager, Equity Office Properties; Nathan Nayman, 
Executive Director, Committee on Jobs; Barry Hermanson; Jim Mathias, San Francisco Chamber of Commerce. 
Continued to 6/12/02, as a Special Order at 2:00 p.m. 

Heard in Committee. Speakers: Edward Harrington, Controller; Susan Leal, Treasurer-Tax Collector; Barry 
Hermanson; Julie Van Nostern, Deputy City Attorney; Raymond Lee; Jim Mathias, San Francisco Chamber of 
Commerce; Nathan Nayman, Executive Director, Committee on Jobs; Debra Mugnani Monroe, Monroe 
Personnel Service LLC/Temptime; La Wanna Preston, Staff Director, Sendee Employees International Union, 
Local 790; Chris Maddy, Local 250; Linda Joseph, Local 535. 
CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



ADJOURNMENT 



The meeting adjourned at 5:25 p.m. 



City and County of San Francisco 27 Printed at 5:40 PM on 3/2/04 



CITY AND COUNTY 



U 




[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 



OF SAN FRANCISCO 



JBOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



June 6, 2002 



TO: ^Finance Committee 

FROM: Budget Analyst 

SUBJECT: June 12, 2002 Finance Committee Meeting 

Item 1 -File 02-0842 



DOCUMENTS DEPT. 
JUN 1 1 2002 

SAN FRANCISCO 
PUBLIC LIBRARY 



Note: This item was continued by the Finance Committee at its meeting of June 
5, 2002 pending submission of additional information by the Department. 



Department: 
Item: 



Description: 



Recreation and Park Department 

Ordinance waiving the competitive bid requirements for 
the Recreation and Park Commission's award of a 
contract not to exceed $2.5 million over a five year period 
for renovation of playgrounds, restoration of natural areas 
and implementation of erosion control measures in San 
Francisco parks, and exempting the contract from 
prevailing wage requirements. 

The proposed ordinance would waive the City's 
competitive bidding requirements to authorize the 
Recreation and Park Department (RPD) to award a 
contract, without the use of competitive bidding 
procedures, in an amount not to exceed $2.5 million, to 
the San Francisco Conservation Corps (SFCC), a 
nonprofit organization, for 1) renovation of park 
playgrounds, 2) restoration of designated Significant 
Natural Resource Areas, and 3) implementation of erosion 
control measures in the parks throughout the City. The 
proposed ordinance would also exempt the subject RPD 
contract with SFCC from prevailing wage requirements, 
pursuant to Section A 7.204 of the City's Charter. 



Memo to Finance Committee 

June 12, 2002 Finance Committee Meeting 



Attachment I, provided by Mr. Marvin Yee of the RPD, 
contains a) program descriptions for the work to be done 
under the contract, b) various RPD facilities where the 
work is to be done, c) the allocation of funds by work 
category for the $2.5 million contract, d) hourly rates for 
services to be provided, and e) funding sources for the 
contract. 

According to Mr. Yee, Significant Natural Resource Areas 
are defined as RPD properties that meet specific criteria 
including properties which contain natural biotic or 
geomorphic remnants of the indigenous landscape, 
contain rare types of species or habitat, and are 
vulnerable to degradation from an imminent ecological 
crisis. Mr. Yee reports that there are approximately 26 
such designated areas in the City, all of which may 
benefit from the proposed restoration work under the 
contract. According to Mr. Yee, at least eight playgrounds 
would be renovated under the contract, to comply with 
safety standards and wheelchair accessibility 
requirements. Mr. Yee also states that erosion control 
methods, at a minimum of five park locations, would be 
implemented under the contract to prevent park 
deterioration and to protect park built facilities and 
landscapes. 

The proposed ordinance would also exempt the subject 
RPD contract with SFCC from prevailing wage 
requirements. 

The SFCC is eligible to be exempt from prevailing wage 
requirements in its contract with the RPD because SFCC 
meets the conditions for exemption set forth in Section A 
7.204(b) of the City Charter. Section A 7.204(b) provides 
that the Board of Supervisors may exempt from the 
prevailing wage requirement any contract where the work 
is to be performed by a nonprofit organization that 
provides job training and work experience for 
disadvantaged individuals in need of such training and 
experience, and the nonprofit organization either (1) has a 
board of directors appointed by the Mayor or (2) exists 
primarily to design and build urban gardens, yards, and 
play areas. SFCC is a nonprofit organization that 
provides job training and work experience for 
disadvantaged individuals. According to Mr. Yee, the 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

2 



Memo to Finance Committee 

June 12, 2002 Finance Committee Meeting 



Comments: 



SFCC has a 16-member board of directors appointed by 
the Mayor and exists primarily to design and build urban 
gardens, yards, and play areas. 

1. According to Mr. Yee, the proposed ordinance 
incorrectly states that the term of the contract would be 
four and one-half years. The correct contract term would 
be five years. 

2. The subject contract had a May 1, 2001 beginning date 
and a termination date of April 30, 2006. According to Mr. 
Yee, the DPR is requesting approval of this proposed 
ordinance at this time, over one year after the contract 
starting date, because of extended labor union 
discussions. Mr. Yee reports that to date, no funds have 
been expended nor have any services been rendered by 
the SFCC in relation to the contract. According to Ms. 
Mary King-Gorwky of RPD, the term of this five-year 
contract is now expected to begin on June 15, 2002 and 
terminate on June 14, 2007. 



Recommendations: 



3. Attachment II is a memorandum provided by Mr. Yee, 
which states the reasons as to why the RPD is requesting 
to award a $2.5 million contract without utilizing the 
City's competitive bidding procedures. 

4. According to Mr. Yee, the source of funds for the 
$2,500,000 contract over its five-year term will include 
approximately $1,000,000 in anticipated CDBG grant 
funds, $125,000 in anticipated other grant funds, and 
$1,375,000 in anticipated Open Space Program funds and 
General Fund monies. According to Mr. Yee, of the 
$1,375,000 in Open Space and General Fund monies, 
$200,000 has been included in the RPD FY 2002-2003 
budget, and the remaining $1,175,000 will be requested 
by the RPD in future RPD budgets. 

1. In accordance with Comment No. 1, amend the 
proposed ordinance to reflect the correct contract term of 
five years, not four and one-half years, as is presently 
contained in the ordinance. 



2. Approval of the proposed ordinance, as amended, is a 
policy matter for the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

3 



Attachment I 

Page 1 of 3 



Memo cc 5inar.cs Committee 

May 29, 2002 FLr.2T.cs Committee Meeting 

Attachment A 

Praiec: : Rencvaf.cn cf children's play areas 

Sues mav include, but not [united re : 

24" St/York Mini Park 

Buchanan Sc. Mail (3er.veeu Turk and Golden Gate Sis.) 

Crocker Amazon Playground (Geneva/Moscow Scs.j 

Hayes Valley Playground (Eayes/3uchanan Sts.) 

Ksiloch-Veiasco Playground 

Kimball Playground (Ellis/Pierce So.) 

Little Kollywood Park (Tccoloma/Lathrop Sts.) 

Silver Terrace Playground (Waterville Sl) 

Scone of Work : 

Provide materials and labor for. but not limited to: 

Site demolition 

Installation of play equipment 

Installation cf resilient surfacing, including rubber matting and playground sand 

Concrete work 

Decomposed granite paving 
Disability access improvements 
Landscaping 

Scope of work shall not include carpentry, electrical, plumbing, or ironwork, unless 
approved by the S7RPD Assistant Superintendent of Parks, Structural Maintenance. 

Personnel Rates : 

Corpsmember Rate: S24.50/hour 
Supervisor Rate: 524.50/hour 

Estimated 3udge: : S2 : 000.000 fcr ihe 5-year contract 

■Anhcinated Sources of Funds : 

Si.000,000 Grants 

S 1 ,000,000 Open Space P:o-c3m ar.c General Fund 

S2.000.000 TOT.AL 



Attachment I 
Page 2 cf 3 



Memo to finance Committee 

May 29, 2002 Finance Committee Meeting 

Preiser : Rastcraricn. of natural areas 

Fkcamcies cf significant natural resource areas : 

Bayview Hill Hawk Kill 

3 recks Property Lake Merced 

Buena Vista Park Mount Davidson 

Edgehiii Open Space Sharp Park 

Goiden C-ate Park Iwin Peaks 

Scope of'work : 

The scope ofwock wiU consist of, but not limited tc, the following: 

Broom - Seedlings removed in spnng by hand pulling; adult removed usins weed 
wrenches or hand chain saws when individuals are too large for weed wrenches. 

Fennel - Hand removal of adults and seedling with mattocks. 

Cotoneaster - Cut shrubs with chain saw loppers. 

Zuciayptus - Saplings of 6" and less removed with chain saws. 

Pampas grass - Hand removal with shovels and mattocks. 

Plant and debris removal activities will be combined with other restoration activities such 
as seed collection, plant propagation, nursery maintenance and plantine. 



Dot: 



onnel Rates : 

SFCC Rare: 323/hour 

Fsurr.ated Budget : 5250,000 fcr the 5-year contract 

Anticicated Sources of Funds : 

5 125.000 Grants 

5125,000 Open Space Program 

S250 r 000 TOTAL 



Attachment i 

rase 3 cf 3 



Memo to Finance Committee 

Mav 29. 20C2 Finance Committee MeerinH 

Proieer : Erosion control 

Site; . but net limited to. : 

Buer.a Vista Park Pine Lake Park 

Golden Gate Park Pioneer Park 

McLaren Psrk 

Scone of Work : 

Provide materials and labcr for, but not limited tc, proven and acceptable methods of 

erosion control, including trail improvements, minor gracing, retaining walls uo :o 3' 
high, and bio technical siope stabilization techniques (brush layering, branch DacJrifl 
wattling, plastic or jute netting, and re-vegetation). 

Scope of work shall not include canopy thinning, retaining wails greatsr than 3* high, or 
irrigation systems, unless approved by the SPRPD Assistant Superintendent of Parks 
(Structural Maintenance) cr the SFRPD Urban Forester. 

Personnel Rates : 

Corpsmember Rate: S23.C0'hour 

Field Supervisor Rate: S23.00/hour 

Estimated Budget : S250.0CO for the 5-year contract 

Anticipated Sources cr'Fur.cs : Open Space Program and General Fund 



p5?g 2 or 1 



May 29, 2002 Finascs Comnicss Mesang 

.Arrschraeat 5 

The Receadcn and Park Department (R?D) wishes tc award the subiecr contract 

for an amour.: ~oz to eccezd 52.5 million, over a period or five vs2ri. without 
compeddve bid, even though he e_xper.dir.:re involved ir. each contract exceeds 
S50.Q00. because 

(I; the development of disadvantaged individuals will besc serve the oubiic 
interest by having a sigr.ificar.t posicve irripact or. the economic health of the 
City; and 

(2) the 5FCC has been awarded 5200,000 Community Develocnisnt clock Gran: 
(CDBG) amounts ccr 2i' h St/York Mini Park and Crocker Amazon 
Playground. The RPD wishes to supplement these grant amour.::; ro 
comcletaly fund tb.ese rencvadon project. 



Memo to Finance Committee 

June 12, 2002 Finance Committee Meeting 

Item 49 - File 02-0778 



Department: 



Item: 



Description: 



Department of Administrative Services, Office of Contract 
Administration, Purchasing Division 

Resolution designating the San Francisco Independent to 
be the City's official newspaper for Type 2 non-consecutive 
day official advertising, for Fiscal Year 2002-2003. 

Proposition J, which was approved by the San Francisco 
electorate in November of 1994, in part, changed the 
criteria by which the City selects a newspaper to pubhsh 
the City's official advertising. The Purchasing Division 
advises that, under Proposition J, pursuant to Section 
2.81 of the Administrative Code, several criteria are 
considei'ed and used to evaluate bids, on the basis of a 
point system. Bidders are required to submit typeset 
samples and other documentation for evaluation 
purposes. The criteria used for evaluation of bids under 
Section 2.81 includes (1) the cost of advertising in each 
newspaper (the newspaper which bids the lowest price for 
advertising receives additional points), (2) the level of 
circulation of each newspaper (the newspaper with the 
largest circulation receives additional points), (3) the cost 
of the newspaper (any newspaper with a majority of 
circulation that is free of charge to the general public 
receives additional points), and (4) the ownership of the 
newspaper (newspapers which are owned by local, 
minority or women-owned firms receive additional 
points). 

The City's official advertising is divided into two 
categories: 

Type 1 - Advertisements for Two or More Consecutive 
Davs: Official advertising which must be published on two 
or more consecutive days, and all official advertising 
which is required to be published in accordance with 
2.103 or 2.108 of the Charter for special meetings of the 
Board of Supervisors and its standing or special 
committees. The official newspaper must publish at least 
5 consecutive days a week for Type 1 official advertising. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

June 12, 2002 Finance Committee Meeting 

Tvpe 2 - Advertisements for Single or Non-consecutive 
Davs : Official advertising, which must be published one 
time (other than one-time advertising related to special 
meetings for the Board of Supervisors and its standing 
and/or special committees) or more than one time but not 
more than three times per week for a specified number of 
weeks. The official newspaper must be printed in the City 
at least 3 days a week for Type 2 official advertising. Such 
days do not need to be consecutive days. 

The proposed resolution designates the San Francisco 
Independent as the official newspaper for Type 2 official 
advertising for FY 2002-2003. The City currently 
contracts with the San Francisco Independent for Type 2 
official advertising. That contract expires on June 30, 
2002. 

Comments: 1. According to Mr. Mike Ward of the Purchasing 

Division, in response to its Invitation for Bids for FY 
2002-2003, the San Francisco Independent submitted the 
sole bid for Type 2 advertising. Attachment I, provided by 
the Purchasing Division, contains bid data for the San 
Francisco Independent. 

2. For FY 2002-2003, Mr. Ward states that the costs for 
Type 2 official advertising in the San Francisco 
Independent would total an estimated $378,408, which is 
the same as the projected actual costs for FY 2001-2002 of 
$378,408. As shown in Attachment I, the cost per line of 
typeset to be charged by the San Francisco Independent 
in FY 2002-2003 would be $3.98, which is the same per 
line typeset rate charged by the San Francisco 
Independent in FY 2001-2002. 

3. According to the Mr. Ward, the San Francisco 
Independent fully complies with all City contracting 
requirements and qualifies to be the official newspaper for 
Type 2 official advertising through the bidding process. 

4. According to Mr. Ted Lakey of the City Attorney's 
Office has advised that the Board of Supervisors need not 
accept the Purchasing Division's recommendations to 
award contracts to newspapers for official advertising and 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

9 



Memo to Finance Committee 

June 12, 2002 Finance Committee Meeting 

may designate any newspaper which is qualified under 
the Charter and the Administrative Code. 

5. Mr. Ward advises that the San Francisco Examiner 
was the only newspaper that submitted a bid for Type 1 
official advertising for FY 2002-2003. However, Mr. Ward 
advises that the Examiner's bid was not responsive 
because (a) the newspaper is not printed in the City as 
required by Section 2.80-1 (a) of the Administrative Code; 
and (b) the newspaper is not in compliance with the 
requirements of Chapter 12B of the Administrative Code 
pertaining to equal benefits for domestic partners. 
Attachment II, provided by Mr. Ward, explains two 
options for the Board of Supervisors to consider in 
designating the City's Type 1 official advertising 
newspaper for FY 2002-2003. Such designation of the 
City's Type 1 official advertising newspaper will be the 
subject of future legislation to be submitted by the 
Purchasing Division to the Board of Supervisors. 

Recommendation: Approval of the proposed resolution is a policy matter for the 

Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

10 



Exhibit B 



Type 2 Official Advertising - for Non-consecutive Day Publication 
Bid Prices and Estimated Costs 
FY 2001-2002 and 2002-2003 





SF Independent Bid 
2001-2002 


SF Independent Bid 
2002-2003 


Cost Per Line 


3.98 


3.98 


Estimated Annual Cost * 


378,408 


378,408 



Annual cost estimated using actual payments to calculate monthly average cost and extending to 12 months 



11 



City and County of San Francisco 




Willie Lewis Brown. Jr. 
Mayor 



Attachment II 

rage 1 of 2 
Office of Contract Administrator 

Judith A. B>ackwe! 
Directo 

Purchasing Divisio 



May 22, 2002 



TO. 



FROM: 



Maureen Singleton 
Judget Analyst 

Pward. 
Assistant Director of Purchasing 




•±Q^u^£>^) 



R£: 



Advertising Contracts FY2002-2003 



In response to your request, this memorandum further clarifies maners relating to Type 1 official 
advertising. 

In our letter to Gloria L. Young, dated May 14, 2002, we made no recommendation to the Board for Type 
1 official advertising because no responsive bids were received in response to the City's invitation to bid. 
Adding that the San Francisco Examiner submitted the only bid received for this category of adv;rtising. 
Further, we stated that the Chronicle, the current vendor for Type 1 advertising, did not bid for tr e 
FY2002-2Q03 contract. The Chronicle advised this office that they are willing to extend their FY2001- 
2002 contract. These are the options that we presented To the Board relating to Type 1 advertising. 

We would like to clarify that we are requesting the Board's directive regarding designation of anewspape 
for Type 1 official advertising. Then, upon receiving instructions from the Board about this mat er, the 
Purchaser will submit separate legislation to designate a newspaper as the City's official newspaper for 
Type 1 advertising. 

If you have questions or need further clarification, e-mail or call mc at 554-6740. 



-^7 



City Hall. Room -130 1 Or. Carlton 3. Goodlett Place San Francisco CA 94102-1535 TqI. (415) 554-6743 Fax (4 I 5) 554- 
Ho-c Poqs: www.ci.sf.ea us/purchase' Rci/ciea pase' E-mail; Pur.:hasi ig@ci.s'.eal 

12 



Attachment II 

Page 2 of 2 
& Exhibit A 



Type 1 Official Advertising - for Consecutive Day Publication 

Comparison - Examiner and Chronicle Offers 

Price and Annual Estimated Cost 

Fiscal Year 2002-2003 





Examiner's Bid 
2002-2003 


Extension of 

Chronicle's 2001-2002 

Contract 


Cost Per Line 


5.75 


8.85 


Estimated Annual Cost 


32,051 


49,330 



* Annua] cost estimated by first using actual payments to calculate monthly average cost and extending to 
12 months. Then, calculating the total number of lines by dividing the annual cost by the cost per line in 
FY200 1-2002 contract. The number of lines is then multiplied by the cost per line offered by the Examiner 
And Chronicle in FY 2002-2003. 



13 



Memo to Finance Committee 

June 12, 2002 Finance Committee Meeting 



Item 50 - File 02-0779 
Department: 



Department of Administrative Services, Office of Contract 
Administration, Purchasing Division 



Item: 



Resolution designating Asian Week to be the City's 
outreach advertising newspaper for the Chinese 
community and El Reportero to be the City's advertising 
outreach newspaper for the Hispanic community, for 
Fiscal Year 2002-2003. 



Description: 



Proposition J, which was approved by San Francisco 
voters in November of 1994, provided, in part, for an 
Outreach Advertising Fund to be established for the 
purpose of the City placing "outreach advertising" or 
weekly notices of items pertaining to governmental 
operations in periodicals selected to reflect the diversity in 
race and sexual orientation of the population of the City. 
Outreach advertisements include, but are not limited to, 
information about issues that are being reviewed by the 
Board of Supervisors and that directly affect the public. 
Pursuant to Proposition J and in accordance with Section 
2.81-2(a) of the Administrative Code, the City is required 
to withhold 10 percent of the annual amounts paid for the 
City's Type 1 and Type 2 official advertising and to 
deposit these monies into the Outreach Advertising Fund. 

The City's official advertising is divided into two 
categories: 

Type 1 - Advertisements for Two or More Consecutive 
Days: Official advertising which must be published on two 
or more consecutive days, and all official advertising 
which is required to be published in accordance with 
2.103 or 2.108 of the Charter for special meetings of the 
Board of Supervisors and its standing or special 
committees. The official newspaper must publish at least 
5 consecutive days a week for Type 1 official advertising. 

Type 2 - Advertisements for Single or Non-consecutive 
Days: Official advertising, which must be published one 
time (other than one-time advertising related to special 
meetings for the Board of Supervisors and its standing 
and/or special committees) or more than one time but not 
more than three times per week for a specified number of 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

14 



Memo to Finance Committee 

June 12, 2002 Finance Committee Meeting 

weeks. The official newspaper must publish at least 3 
days in a calendar week for Type 2 official advertising. 
Such days do not need to be consecutive days. 

The Purchasing Division estimates that the FY 2002-2003 
cost for Type 1 official advertising (estimated at $32,051 
based on FY 2001-2002 costs) and Type 2 official 
advertising (estimated at $378,408 based on FY 2001- 
2002 costs) would total $410,459 Therefore, the estimated 
amount available for the Outreach Advertising Fund in 
FY 2002-2003, based on 10 percent of Type 1 and Type 2 
official advertising, is $41,046. Ms. Pamela Levin of the 
Controller's Office advises that there is a balance of 
approximately $50,827 in the Outreach Advertising Fund 
as of May 21, 2002. According to Ms. Levin, any 
remaining balance in the Outreach Advertising Fund at 
the end of FY 2001-2002 will carryover to FY 2002-2003. 
Mr. Mike Ward of the Purchasing Division estimates that 
approximately $83,000 would be available for outreach 
advertising in FY 2002-2003. 

Comments: 1. Since the passage of Proposition J, approved by the 

voters in November of 1994, bid prices are only one of 
several factors evaluated and considered in designating 
which newspapers should be the City's outreach 
advertising newspapers. Proposition J requires the 
Purchasing Division to recommend to the Board of 
Supervisors the newspapers with the highest total point 
scores. According to Mr. Ward, the Asian Week received 
the highest score of the three bids from newspapers 
seeking to provide outreach advertising to the Chinese 
community. Mr. Ward advises that El Reportero received 
the highest score of the three responsive bids from 
newspapers seeking to provide outreach advertising to the 
Hispanic/Latino community. Attachment I, provided by 
the Purchasing Division, contains bid data and point 
calculation information showing that Asian Week and El 
Reportero received the highest scores to represent the 
Chinese and Hispanic communities respectively. 

2. According to the Mr. Ward, both the Asian Week and 
El Reportero fully comply with all City contracting 
requirements and qualify to be designated the City's 
outreach advertising newspapers. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

15 



Memo to Finance Committee 

June 12, 2002 Finance Committee Meeting 



Recommendation: 



3. According to Mr. Ted Lakey of the City Attorney's 
Office, the Board of Supervisors is authorized to and has 
previously designated newspapers to provide outreach 
advertising even though such newspapers do not comply 
with all contracting requirements under the City's 
Charter and the Administrative Code. 

4. The following nine newspapers were designated as the 
City's outreach advertising newspapers for FY 2001-2002: 
El Mensajero, El Reportero and El Latino for the 
Hispanic/Latino community; the Chinese Times, the 
China Press and Asian Week for the Chinese community; 
the San Francisco Bay View for the African American 
community; the Hokubei Mainichi for the Japanese 
community; and the San Francisco Bay Times for the 
Lesbian/Gay/Bisexual/Transgender community. 

5. As noted in Attachment I, the Purchasing Division has 
not recommended designating newspapers for outreach 
advertising in the African-American and the 
Lesbian/Gaj r /Bi-sexual/Transgender communities because 
the Purchasing Division considered the submitted bids to 
be non-responsive. Attachment II, provided by the 
Purchasing Division, states that the Purchasing Division 
has not recommended the designation of newspapers for 
outreach advertising in the Japanese, Southeast Asian 
and Russian communities because these communities are 
not mandated to be provided with outreach advertising by 
Section 2.80-l(b) of the Administrative Code. Also, the 
bids were not responsive for the Southeast Asian and 
Russian communities. 

Approval of the proposed resolution is a policy matter for 
the Board of Supervisors. 




Harvey M. Rose 



cc: Supervisor Peskin 
Supervisor Daly 
President Ammiano 
Clerk of the Board 
Controller 
Ben Rosenfield 
Ted Lakey 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

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City and County of San Francisco 




Attachment II 
Office of Contract Administration 

Judith A. Bl.jckwell 
Director 



Purchasing Division 



May 22, 2002 



TO. 



FROM: 



Maureen Singleton 
Budget Analyst 




'MlchaeiD. Ward. 
Assistant Director of Purchasing 



RE: 



Advertising Contracts FY2Q02-2003 



As stated in our letter of May 14. 20C2, we are not making a recommendation to the Board for outreach 
advertising for the African-American and Lesbian/GayBi-sexual/Transgender communities beca ise no 
responsive were received from newspapers circulating in those communities. See Exhibit C app( nded to 
our letter of May 14. 2002. 

In addition, we are not making a recommendation to the Board for the Japanese, Southeast Asian and 
Russian communities because these communities are not mandated by Section 2. SO- 1(b) of the 
Administrative Code. 

We respectfully request the Board's directive regarding designation of outreach newspapers for these 
communities. 

If you have questions or need mere information, email or call me at 554-6740, or Luis Espinoza at 554- 
6736. 



City Hall, Room 430 1 Dr. Carlton E. Goodlett Place San Francisco CA 94102-635 Tel (41 5) 554-6743 Fax (-1 5) 554-6717 
i-iOTic Page: www.ci.st.c* js/purch.ise/ Recycled p.iror E-mail: Pu/Chas ng@ei :• :o jS 



22-200J 



19 




City and County of San Francisco c,t y Ha " 

J J 1 Dr. Carlton B. 

Meeting Minutes Goodien piace 

San Francisco, CA 

Finance Committee 94102-4689 

Members: Supervisors Aaron Peskin and Chris Daly 

Clerk: Gail Johnson 

Friday, June 21, 2002 11:30 AM City Hall, Room 263 

Special Meeting 

Members Present: Aaron Peskin, Chris Daly, Tom Ammiano. 



Supervisor Ammiano appointed himself to serve as a member of the Finance Committee. 

MEETING CONVENED 



The meeting convened at 1 1:41 a.m. 
020779 [Outreach Advertising] 

Resolution designating the Asian Week to be outreach newspaper of the City and County of San Francisco for 
the Chinese community; El Reportero to be outreach newspaper of the City and County of San Francisco for 
the Hispanic community; the Bay Area Reporter to be outreach newspaper of the City and County of San 
Francisco for the Gay/Lesbian/Bisexual/Transgender community; and the San Francisco Bay View to be 
outreach newspaper of the City and County of San Francisco for the African American community, for 
outreach advertising for the fiscal year commencing July 1, 2002 and ending June 30, 2003. (Purchaser) 
5/15/02, RECEIVED AND ASSIGNED to Finance Committee. 

6/12/02, AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. Heard in Committee. Speakers: Michael Ward, 
Assistant Director of Purchasing, Purchasing Division, Office of Contract Administration; Willie Ratcliff, Publisher, San Francisco 
Bayview; Luis Espinosa, Senior Purchaser, Purchasing Division, Office of Contract Administration; Michael Lam. Chairman of the 
Board, Chinese Times; Commissioner Richard Ow; Thomas Sie, President, Chinese Times; Jason Ho, General Manager, Chinese Times, 
Serena Scales, El Mensajero; Carmen Ruiz, El Latino; Diane Perez, Board of Supervisors; Theodore Lakey, Deputy City Attorney. 
Amendment of the Whole prepared in Committee. 
6/12/02, CONTINUED TO CALL OF THE CHAIR. 

Heard in Committee. Speakers: Michael Ward, Assistant Director of Purchasing. Purchasing Division. Office 
of Contract Administration. 
Amendment of the Whole prepared in Committee. 
To Board as a Committee Report. Monday. June 24, 2002. 
AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. 

Resolution designating Asian Week, the China Press and the Chinese Times to be outreach newspapers of the 
City and County of San Francisco for the Chinese community; El Reportero, El Latino and El Mensajero to be 
outreach newspapers of the City and County of San Francisco for the Hispanic community; the Bay Area 
Reporter to be outreach newspaper of the City and County of San Francisco for the 

Lesbian/Gay/Bisexual/Transgender community; and the San Francisco Bay View to be outreach newspaper of 
the City and County of San Francisco for the African American community, for outreach advertising for the 
fiscal year commencing July 1, 2002 and ending June 30, 2003. (Purchaser) 
RECOMMENDED AS AMENDED AS A COMMITTEE REPORT by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco I Printed at 5:JI PM 



Finance Committee Meeting Minutes June 21, 2002 



020778 [Official Advertising] 

Resolution designating the San Francisco Independent to be the official newspaper of the City and County of 
San Francisco for the category of non-consecutive day official advertising, for the fiscal year commencing July 
1, 2002 and ending June 30, 2003. (Purchaser) 
5/15/02, RECEIVED AND ASSIGNED to Finance Committee. 

6/12/02, CONTINUED TO CALL OF THE CHAIR. Heard in Committee. Speakers: Michael Ward, Assistant Director of Purchasing, 
Purchasing Division, Office of Contract Administration; Marc Chamot; Eddie Rosano, Vice President, Director of Organizing, Graphic 
Communications International Union, Local 4N; Grant Corley; Timm Sinclair; Charles Minster; Walter Johnson, San Francisco Labor 
Council; Denis Mosgofian; Howard Wallace; Theodore Lakey, Deputy City Attorney. 

Heard in Committee. Speakers: Michael Ward, Assistant Director of Purchasing, Purchasing Division, Office 
of Contract Administration; John Kennedy, Deputy City Attorney; Wayne Wedgeworth, San Francisco 
Independent and San Francisco Examiner; Julie Soo; Gail Lamud; Shelley Bradford-Bell, Bayview Opera 
House; Eddie Rosario, Vice President, Director of Organizing, Graphic Communications International Union, 
Local 4N; Marc Chamont; Walter Johnson, San Francisco Labor Council; Dorothy Peterson; Linda 
Richardson; Amos Brown, Baptist Ministers Conference of San Francisco and Third Baptist Church; Andrew 
Lee; John Barry, President, Sunset Heights Association of Responsible People; Bob Pellegrine; Win Hing; 
Sing Lift; Gwen Lee; Helynna Brooke; Stephanie; Julie Lee; Edward Harrington, Controller. 
To Board as a Committee Report, Monday, June 24, 2002. 
Amendment of the Whole prepared in Committee. 

AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. 

Resolution designating the San Francisco Independent to be the official newspaper of the City and County of 
San Francisco for the category of non-consecutive day official advertising, for the fiscal year commencing July 
1, 2002 and ending December 31, 2002. (Purchaser) 
REFERRED WITHOUT RECOMMENDATION by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 2 Printed at 5:41 PM on 3/2/04 






Finance Committee Meeting Minutes June 21, 2002 



021068 [Rescinding appropriation authority for Airport capital projects, and appropriate funding for capital 
projects] 
Supervisors Peskin, Daly 

Ordinance rescinding $1,087,448,058 of unencumbered appropriation authority for airport capital projects and 
appropriating $326,341,870 in fund equity and $220,316,885 from future bond funds for a total of 
$546,658,755 for capital projects at the Airport Commission for fiscal year 2001-02. 

(Fiscal impact.) 

6/10/02, RECEIVED AND ASSIGNED to Budget Committee. Sponsor requests this item be scheduled at the June 20, 2002 meeting with 
the presentation of the Airport's Budget. 
6/17/02, TRANSFERRED to Finance Committee. 

Heard in Committee. Edward Harrington, Controller; John Martin, Airport Director; Vanessa d'Ambrosio; 
Sal Torres, Council member, City of Daly City; Anthony Manning; Richard Berry; Norman Rolfe, San 
Francisco Tomorrow; Derek Blackwell, Clean Water Action; Pete Zachos, Machinists Union, Local 1781 ; 
Jane Selsnow, Sierra Club; Stan Warren, San Francisco Building Trades Council; Tim Paulson, San Mateo 
County Central Labor Council; Walter Johnson, San Francisco Labor Council; Sean Randolph, President, 
Bay Area Economic Forum; Peter Thorner; Douglas Perry, Organized Labor Newspaper; Nancy Wuerfel; 
Nicole Parisi-Smith, Waterkeepers Northern California and San Francisco Bay Keeper; Ellen Blair, Save the 
Bay; Richard Zimmerman, Sierra Club; Alan Wayne, Director of Public Affairs, United Airlines; Dan Arola; 
Robert Miller, San Francisco Crab Boat Owners Association; John Mattox, California Resources Agency and 
California Department of Fish and Game; Female Speaker; Ernestine Weiss; Larry Mazzola, Vice President. 
Airport Commission; Michael Bornstein, Staff Director, Sierra Club, San Francisco Bay Chapter; Craig 
Denisoff, Vice President, Wildlands, Inc.; Korbey Hunt, Chairman, SFO Airlines Affairs Committee; Lee 
Glitch, President, San Francisco Chamber of Commerce; John Bardis; David Lewis, Executive Director, Save 
the Bay; Dan Ashby, United Airlines Pilots Association; Eileena Bokin. 
To Board as a Committee Report, Monday, June 24, 2002. 
RECOMMENDED AS COMMITTEE REPORT by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



ADJOURNMENT 



The meeting adjourned at 3:14 p.m. 



City and County of San Francisco 3 Printed at 5:41 PM on 3/2/04 




City and County of San Francisco 

Meeting Agenda 

^Finance Committee 

Members: Supervisors Aaron Peskin and Chris Daly 
Clerk: Gail Johnson 



City Hall 
1 Dr. Carlton B. Goodlett Place 
San Francisco, CA 94102-4689 



Wednesday, July 10, 2002 



12:30 PM 
Regular Meeting 



City Hall, Room 263 



Note: Each item on the Consent or Regular agenda may include the following documents: 

1) Legislation 

2) Budget Analyst report 

3) Legislative Analyst report 

4) Department or Agency cover letter and/or report 

5) Public correspondence 

These items will be available for review at City Hall, Room 244, Reception Desk. 



Each member of the public will be allotted the same maximum number of minutes to speak as set by 
the Chair at the beginning of each item, excluding City representatives, except that public speakers 
using translation assistance will be allowed to testify for twice the amount of the public testimony 
time limit. If simultaneous translation services are used, speakers will be governed by the public 
testimony time limit applied to speakers not requesting translation assistance. 



AGENDA CHANGES 



REGULAR AGENDA 



DOCUMENTS DEPT. 
JUL 5 2002 

SAN FRANCISCO 
PUBLIC LIBRARY 



City and County of San Francisco 



Primed at 3:50 PM on 7/3/02 



Finance Committee Meeting Agenda Wednesday, July 10, 2002 

1. 021170 [Veterans Building Special Election] 

Supervisor Sandoval 

Ordinance calling and providing for a special election to be held in the City and County of San 
Francisco on Tuesday, November 5, 2002, for the purpose of submitting to the voters of the City and 
County of San Francisco a proposition to incur the following bonded debt of the City and County: 
One Hundred Twenty-Two Million Seven Hundred Fifty-Five Thousand Dollars ($122,755,000) for 
the acquisition, rehabilitation, renovation, improvement, construction and/or reconstruction by the 
City and County of the San Francisco War Memorial Veterans Building, and all other works, property 
and structures necessary or convenient for the foregoing purposes; providing for the use of available 
annual revenues on deposit in the War Memorial Special Fund to reduce the property tax impact; 
finding that the estimated cost of such proposed project is and will be too great to be paid out of the 
ordinary annual income and revenue of the City and County and will require expenditures greater than 
the amount allowed therefor by the annual tax levy; reciting the estimated cost of such proposed 
project; fixing the date of election and the manner of holding such election and the procedure for 
voting for or against the proposition; fixing the maximum rate of interest on such bonds and providing 
for the levy and collection of taxes to pay both principal and interest thereof; prescribing notice to be 
given of such election; finding the proposed project is in conformity with the priority policies of 
Planning Code Section 101.1(b) and with the General Plan consistency requirement of Administrative 
Code Section 2A.53; consolidating the special election with the general election; establishing the 
election precincts, voting places and officers for the election; waiving the word limitation on ballot 
propositions imposed by San Francisco Municipal Elections Code Section 510; complying with 
Section 53410 of the California Government Code; and incorporating the provisions of Article V of 
Chapter V of the San Francisco Administrative Code. 

7/1/02, RECEIVED AND ASSIGNED to Finance Committee 



2. 021171 [War Memorial Special Fund] 

Supervisor Sandoval 

Ordinance amending Article XIII of Chapter X of the San Francisco Administrative Code regarding 
the War Memorial Special Fund (the "Fund") by amending Section 10.100-361 to correct outdated 
Administrative Code section references and clarify the uses of moneys in the Fund. 

7/1/02. RECEIVED AND ASSIGNED to Finance Committee 



City and County of San Francisco 2 Printed at 3:50 PM on 7/3/02 



Finance Committee 



Meeting Agenda 



Wednesday, July 10, 2002 



021172 [Pedestrian Safety and Livable Streets Special Election] 
Supervisor A mmiano 

Ordinance calling and providing for a special election to be held in the City and County of San 
Francisco (the "City") on Tuesday, November 5, 2002. for the purpose of submitting to the voters of 
the City and County of San Francisco a proposition to incur the following bonded debt of the City and 
County: One Hundred Fifty Million Dollars (5150,000,000) to finance street resurfacing, curb ramp 
construction, sidewalk improvement and street structure improvement projects, street signal and fire 
alarm call box improvement projects, street improvements for bicycle use and all other structures and 
improvements necessary or convenient for the foregoing purposes; finding that the estimated costs of 
such proposed projects are and will be too great to be paid out of the ordinary annual income and 
revenue of the City and County and will require expenditures greater than the amount allowed therefor 
by the annual tax levy; reciting the estimated cost of such proposed project; fixing the date of election 
and the manner of holding such election and the procedure for voting for or against the proposition; 
fixing the maximum rate of interest on such bonds and providing for the levy and collection of taxes 
to pay both principal and interest thereof; prescribing notice to be given of such election; finding the 
proposed project is in conformity with the priority policies of Planning Code Section 101.1(b) and 
with the General Plan consistency requirement of Administrative Code Section 2A.53; consolidating 
the special election with the general election; establishing the election precincts, voting places and 
officers for the election; waiving the word limitation on ballot propositions imposed by San Francisco 
Municipal Elections Code Section 510; complying with Section 53410 of the California Government 
Code; and incorporating the provisions of Article V of Chapter V of the San Francisco Administrative 
Code. 

7/1/02. RECEIVED AND ASSIGNED to Finance Committee. 



021169 [Affordable Housing Bonds Special Election] 
Mayor, Supervisor Ammiano 

Ordinance calling and providing for a special election to be held in the City and County of San 
Francisco (the "City") on November 5, 2002, for the purpose of submitting to the qualified voters of 
the City a proposition for the issuance of bonds by the City (or one of its agencies, departments or 
enterprises) in the principal amount of Two Hundred Fifty Million Dollars (5250,000,000) to finance 
the acquisition, construction and/or rehabilitation of housing affordable to low- and moderate-income 
households and downpayment assistance to low- and moderate-income first-time homebuyers; finding 
that the estimated cost of the project is and will be too great to be paid out of the ordinary annual 
income and revenue of the City and will require expenditures greater than the amount allowed therefor 
by the annual tax levy; reciting the estimated cost of such proposed project; fixing the date of and the 
manner of holding the special election and the procedure for voting for or against the proposition; 
fixing the maximum rate of interest on the bonds and providing for the levy and collection of taxes to 
pay both principal and interest therefor; prescribing notice to be given of the special election; finding 
the proposed project is in conformity with the priority policies of Planning Code Section 101.1(b) and 
with the General Plan consistency requirement of Administrative Code Section 2A.53; consolidating 
the special election with the general election; establishing the election precincts, voting places and 
officers for the special election; waiving the word limitation on ballot propositions imposed by San 
Francisco Municipal Elections Code Section 510; complying with Section 53410 of the California 
Government Code; and incorporating the provisions of Article V of Chapter V of the San Francisco 
Administrative Code. (Mayor) 

7/1/02. RECEIVED AND ASSIGNED to Finance Committee 



City and County of San Francisco 



Printed at 3:50 PM on 7/3/02 



Finance Committee 



Meeting Agenda 



Wednesday, July 10, 2002 



020910 [Revenue Bond Election] 

Resolution calling and providing for a special election to be held in the City and County of San 
Francisco for the purpose of submitting to the qualified voters of said City and County on November 
5, 2002 a proposition for the issuance of revenue bonds and/or other forms of revenue financing by 
the Public Utilities Commission in a principal amount not to exceed $3,628,000,000 to finance the 
acquisition and construction of improvements to the City's water system; and consolidating said 
special election with the General Municipal Election to be held on November 5, 2002; complying with 
Section 53410 of the California Government Code; finding the proposed project is in conformity with 
the priority of Planning Code Section 101.1(b) and the City's General Plan. (Public Utilities 
Commission) 

(Fiscal impact.) 

6/5/02, RECEIVED AND ASSIGNED to Finance Committee. 

6/27/02, SUBSTITUTED. Substituted by the City Attorney 6/28/02, bearing new title. 

6/27/02, ASSIGNED to Finance Committee. 



021070 [MOU, Amendment No. 1, Teamsters Local 853] 
Mayor 

Ordinance adopting and implementing Amendment No. 1 to the 2001-2003 Memorandum of 
Understanding between the Teamsters, Local No. 853 and the City and County of San Francisco by 
adding a new section to Article III.F. Additional Compensation which provides for the pass-through 
of State of California funds to certain represented classes working at Skilled Nursing Facilities. 
(Mayor) 

6/10/02. RECEIVED AND ASSIGNED to Finance Committee. 



020726 [Increasing Fee Charged to Participants in First Offender Prostitution Program] 
Mayor 

Resolution approving increase in authorized fee for the First Offender Prostitution Program to $1,000. 
(Mayor) 

5/6/02. RECEIVED AND ASSIGNED to Finance Committee 

5/31/02, FILED PURSUANT TO RULE 5.37. Withdrawn by Mayor's Office. 

6/26/02. REACTIVATED PURSUANT TO RULE 5.25 to Finance Committee. June 26. 2002 - Reactivated pursuant to 

request of sponsor and approval of President. 

7/1/02. ASSIGNED to Finance Committee. Sponsor requests this item be scheduled for consideration at the July 10, 2002 

meeting. 

7/1/02. SUBSTITUTED Submitted by the Mayor bearing same title. 



021130 [Approval of Lease with the U.S. Customs Service in West Field Cargo Building 1] 

Resolution approving and authorizing the execution of a Lease with the U.S. Customs Service for 
space in West Field Cargo Building 1. (Airport Commission) 

6/19/02. RECEIVED AND ASSIGNED to Finance Committee. 



City and County of San Francisco 



Printed at 3:51 PM on 7/3/02 



Finance Committee 



Meeting Agenda 



Wednesday, July 10, 2002 



020811 [Contracting Out Own Recognizance, Pretrial Diversion, and Misdemeanant Services] 
Supervisor Hall 

Resolution approving the Controller's certification that own recognizance release, pretrial court 
diversion, and supervised misdemeanant services provided to arrested persons in the City and County 
of San Francisco can be practically performed by private contractors at a lower cost for the year 
commencing July 1, 2002 than if work were performed by City and County employees. (Sheriff) 

5/28/02, RECEIVED AND ASSIGNED to Finance Committee. 



10. 020991 [Contracting out Crime Prevention Services] 

Resolution concurring with the Controller's Certification that Crime Prevention Services can be 
practically performed by private contractor for lower cost than similar work services performed by 
City and County Employees. (Police Department) 

6/12/02, RECEIVED AND ASSIGNED to Finance Committee. 



11. 021136 [Contracting out Convention Facilities management, operation and maintenance services] 

Resolution concurring with the Controller's certification that Convention Facilities management, 
operation and maintenance services can be practically performed at Bill Graham Civic Auditorium 
and the Moscone Center by private contractor for a lower cost than similar work services performed 
by City and County employees. (Administrative Services Department) 

6/21/02, RECEIVED AND ASSIGNED to Finance Committee. 



12. 021127 [Setting Fees for City Day Camps] 

Ordinance amending the San Francisco Park Code by adding Section 12.15, setting fees for 
participating in day camps run by the Recreation and Park Department. (Mayor) 

6/19/02, RECEIVED AND ASSIGNED to Budget Committee. 

6/26/02, TRANSFERRED to Finance Committee. June 26, 2002 - Transferred at the direction of the President. 

(6/26/02 - Referred to Youth Commission for comment and recommendation.) 



13. 020987 [Agreement to Quitclaim Twenty-Three (23) Noise Easements] 

Resolution authorizing the rescission by the City and County of San Francisco of twenty-three (23) 
Grants of Easement previously acquired by City, for one property in the City of Pacifica and twenty- 
two (22) in the City of San Bruno. (Real Estate Department) 

6/6/02, RECEIVED AND ASSIGNED to Finance Committee. 



ADJOURNMENT 



City and County of San Francisco 



Printed at 3:51 PM on 7/3/02 



Finance Committee Meeting Agenda Wednesday. July 10, 2002 

IMPORTANT INFORMATION 

NOTE: Persons unable to attend the meeting may submit to the City, by the time the proceeding 
begins, written comments regarding the agenda items above. These comments will be made a part of 
the official public record and shall be brought to the attention of the Board of Supervisors. Any 
written comments should be sent to Committee Clerk, Finance Committee, San Francisco Board of 
Supervisors, I Dr. Carlton B. Goodlett Place, Room 244, San Francisco, California 94102 by 5:00 
p.m. on the day prior to the hearing. Comments which cannot be delivered to the committee clerk by 
that tune may be taken directly to the hearing at the location above. 



LEGISLATION UNDER THE 30-DAY RULE 



(Not to be considered at this meeting) 

Rule 5.42 provides that when an ordinance or resolution is introduced which would CREATE OR 
REVISE MAJOR CITY POLICY, the committee to which the legislation is assigned shall not consider 
the legislation until at least thirty days after the date of introduction. The provisions of this rule shall 
not apply to the routine operations of the departments of the City or when a legal time limit controls 
the hearing timing. In general, the rule shall not apply to hearings to consider subject matter when 
no legislation has been presented, nor shall the rule apply to resolutions which simply URGE action 
to be taken. 



020945 [Submission of an Ordinance to the Voters authorizing Sewer Service Charge Rate Increases] 

Motion ordering the submission of an ordinance to the voters authorizing the Board of Supervisors to 
adopt and impose schedules of sewer service charges to be paid by users in accordance with the San 
Francisco Charter and Part II, Chapter X, Articles 4.1 and 4.2 of the San Francisco Municipal Code 
(Public Works Code) that will provide an aggregate 12% increase of sewer service revenues, at an 
election to be held on November 5, 2002. (Public Utilities Commission) 

6/12/02, RECEIVED AND ASSIGNED to Rules and Audits Committee. 
6/27/02. TRANSFERRED to Finance Committee. 

7/1/02. SUBSTITUTED Substituted by the City Attorney 7/1/02. bearing same title. 
7/1/02. ASSIGNED to Finance Committee 



City and County of San Francisco 6 Printed at 3:51 PM on 7/3/02 



Finance Committee Meeting Agenda Wednesday, July 10, 2002 

021097 [Business Tax] 

Supervisor Peskin 

Ordinance amending the Business and Tax Regulations Code to: (1) enact a new Article 12-A-l 
(Gross Receipts Tax Ordinance) to impose a gross receipts tax on persons engaging in specified 
business activities in San Francisco; (2) amend Article 12- A (Payroll Expense Tax Ordinance) to (i) 
reduce businesses' taxable payroll expense by the amount of payroll expense attributable to their San 
Francisco business activities taxed under Article 12-A-l (Gross Receipts Tax Ordinance), (ii) 
conform Article 12-A (Payroll Expense Tax Ordinance) with the enactment of Article 12-A-l (Gross 
Receipts Tax Ordinance) and amendments to Article 6 (Common Administrative Provisions), (iii) 
repeal the Enterprise Zone Tax Credit set forth in Section 906A. (iv) repeal the $500 surplus business 
tax revenue credit set forth in Section 906E, and (v) consolidate exemptions, definitions and other 
administrative provisions, as amended, that apply to Article 12-A (Payroll Expense Tax Ordinance) 
and other .Articles of the Business and Tax Regulation Code, and place them in Article 6 (Common 
Administrative Provisions); (3) amend Article 12 (Business Registration Ordinance) to conform 
business registration requirements with the enactment of Article 12-A-l (Gross Receipts Tax 
Ordinance) and amendments to Article 12-A (Payroll Expense Tax Ordinance) and Article 6 
(Common Administrative Provisions); (4) amend Article 6 (Common Administrative Provisions) to (i) 
clarify common administrative provisions and conform them with the enactment of Article 12-A-l 
(Gross Receipts Tax Ordinance) and amendments to Article 12-A (Payroll Expense Tax Ordinance) 
and Article 12 (Business Registration Ordinance), (ii) consolidate exemptions, definitions and other 
administrative provisions that apply to Article 12-A (Payroll Expense Tax Ordinance), Article 12-A-l 
(Gross Receipts Tax Ordinance), Article 12 (Business Registration Ordinance) and other Articles of 
the Business and Tax Regulations Code, and (iii) eliminate the Board of Review; (5) amend Section 
501 of Article 7 to clarify the definition of "Permanent Residents" exempt from the tax on the 
transient occupancy of hotel rooms, and (6) amend Section 606 of Article 9 to repeal the exemptions 
to the tax and surcharge upon the rent charged for the occupancy of parking spaces in parking stations 
(i) which are part of residential or hotel premises and (ii) for registered hotel guests where the parking 
station is not located on the hotel premises. 

6/17/02. ASSIGNED UNDER 30 DAY RULE to Rules and Audits Committee, expires on 7/17/2002. 

6/19/02. TRANSFERRED to Finance Committee (6/26/02 - Referred to Small Business Commission for comment and 

recommendation.) 



City and County of San Francisco Printed at 3:51 PM on 7/3/02 



Finance Committee Meeting Agenda Wednesday, July 10, 2002 

Meeting Procedures 

The Board of Supervisors is the Legislative Body of the City and County of San Francisco. The Board has 

several standing Committees where ordinances and resolutions are the subject of hearings at which members of 

the public are urged to testify. The full Board does not hold a second public hearing on measures which have 

been heard in committee. 

Board procedures do not permit: 1) persons in the audience at a Committee meeting to vocally express support 

or opposition to statements by Supervisors or by other persons testifying; 2) ringing and use of cell phones, 

pagers, and similar sound-producing electronic devices; 3) signs to be brought into the meeting or displayed in 

the room; 4) standing in the meeting room. 

Citizens are encouraged to testify at Committee meetings and to write letters to the Clerk of a Committee or to 

its members. City Hall, 1 Dr. Carlton B. Goodlett Place, Room 244, San Francisco, CA 94102. 

Agenda are available on the internet at www.ci.sf.ca.us/bdsupvrs.bos.htm. 

THE AGENDA PACKET IS AVAILABLE FOR REVIEW AT CITY HALL, ROOM 244, RECEPTION DESK. 

Board meetings are televised on channel 26. For video tape copies and scheduling call (415) 557-4293. 

Requests for language translation at a meeting must be received no later than noon the Friday before the 

meeting. Contact Ohn Myint at (415) 554-7704. 

AVISO EN ESPANOL: La solicitud para un traductor en una reunion debe recibirse antes de mediodia de el 

viemes anterior a la reunion. Llame a Erasmo Vazquez (415) 554-4909. 

mm &m&&mmm3>®i'A'mm&M£ 

tnm (415) 554-7701 



Disability Access 

Both the Committee Room (Room 263) and the Legislative Chamber are wheelchair accessible. The closest 

accessible BART Station is Civic Center, three blocks from City Hall. Accessible MUNI lines serving this 

location are: #47 Van Ness, and the #71 Haight/Noriega and the F Line to Market and Van Ness and the Metro 

stations at Van Ness and Market and at Civic Center. For more information about MUNI accessible services, 

call 923-6142. 

There is accessible parking in the vicinity of City Hall at Civic Center Plaza and adjacent to Davies Hall and the 

War Memorial Complex. 

The following services are available when requested by 4:00 p.m. of the Friday before the Board meeting: 

For American Sign Language interpreters, use of a reader during a meeting, or sound enhancement system, 
contact Ohn Myint at (415) 554-7704. 

For a large print copy of agenda or minutes in alternative formats, contact Annette Lonich at (415) 554-7706. 
The Clerk of the Board's Office TTY number for speech-hearing impaired is (415) 554-5227. 
In order to accommodate persons with severe allergies, environmental illness, multiple chemical sensitivity or 
related disabilities, attendees at public meetings are reminded that other attendees may be sensitive to various 
chemical based products. 



City and County of San Francisco 8 Printed at 3:51 PM on 7/3/02 



Finance Committee Meeting Agenda Wednesday, July 10, 2002 

Know Your Rights Under the Sunshine Ordinance 

Government's duty is to serve the public, reaching its decisions in full view of the public. Commissions, boards, 
councils and other agencies of the City and County exist to conduct the people's business. The Sunshine 
Ordinance assures that deliberations are conducted before the people and that City operations are open to the 
people's review. For information on your rights under the Sunshine Ordinance (Chapter 67 of the San Francisco 
Administrative Code) or to report a violation of the ordinance, contact Donna Hall; by mail to Sunshine 
Ordinance Task Force, 1 Dr. Carlton B. Goodlett Place, Room 409, by phone at (415) 554-7724, by fax at (415) 
554-7854 or by email at Donna.Hall@sfgov.org 

Citizens may obtain a free copy of the Sunshine Ordinance by contacting Ms. Hall or by printing Chapter 67 of 
the San Francisco Administrative Code on the Internet, at http://www.sfgov.org/bdsupvrs/sunshine.htm 

Lobbyist Registration and Reporting Requirements 

Individuals and entities that influence or attempt to influence local legislative or administrative action may be 
required by the San Francisco Lobbyist Ordinance [SF Campaign & Governmental Conduct Code Sec. 2.100] to 
register and report lobbying activity. For more information about the Lobbyist Ordinance, please contact the 
San Francisco Ethics Commission at 30 Van Ness Avenue, Suite 3900, San Francisco. CA 94102; telephone 
(415) 581-2300; fax (415) 581-2317; web site www.sfgov.org/ethics 



City and County of San Francisco 9 Printed at 3:51 PM on 7/3/02 



FINANCE COMMITTEE 

S.F. BOARD OF SUPERVISORS 

CITY HALL, ROOM 244 

1 DR. CARLTON GOODLETT PLACE 

SAN FRANCISCO. CA 94102-4689 

IMPORTANT HEARING NOTICE!!! 



).9l5 
fa 



CITY AND COUNTY 




[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 



OF SAN FRANCISCO 



.BOARD OF SUPERVISORS 
BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



TO: ^Finance Committee 

FROM: .Budget Analyst 

SUBJECT: July 10, 2002 Finance Committee Meeting 

Item 5 - File 02-0910 



July 3, 2002 

DOCUMENTS DEPT. 
JUL 9 2002 

SAN FRANCISCO 
PUBLIC LIBRARY 



Department: 



Item: 



Amount: 



Public Utilities Commission (PUC) 
Mayor's Office of Public Finance 

Resolution calling and providing for a special election to 
be held in the City and County of San Francisco for the 
purpose of submitting to the qualified voters of said City 
and County on November 5, 2002 a proposition for the 
issuance of revenue bonds and/or other forms of revenue 
financing by the Public Utilities Commission in a 
principal amount not to exceed $3,628,000,000 to finance 
the acquisition and construction of improvements to the 
City's water system; and consolidating said special 
election with the General Municipal Election to be held on 
November 5, 2002; finding the proposed project is in 
conformity with the priority of Planning Code Section 
101.1(b) and the City's General Plan. 

The maximum principal amount is not to exceed S3. 628 

billion. 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



Source of Funds: 



Revenue bonds and/or other forms of revenue financing. 
Other forms of revenue financing include notes, 
debentures, commercial paper, variable rate demand 
notes and bonds, auction rate securities, lease revenue 
bonds, installment sale agreements, and other forms of 
similar financial products which may be created from 
time to time. 1 



Description: 



The PUC has identified water system ($3,628 billion) and 
clean water system ($996 million) capital improvement 
costs totaling $4,624 billion, comprising: 

• $2,913 bilhon for regional water system 
improvements 2 . Regional customers would pay 70 
percent of the cost ($2,039 billion) and San Francisco 
ratepayers would pay 30 percent of the cost ($874 
million). 

• $715 million for local water system projects within San 
Francisco 3 . This would be entirely funded by San 
Francisco ratepayers. 

• $996 million for Clean Water capital improvement 
projects within San Francisco 4 . This would be entirely 
funded by San Francisco ratepayers. As explained in 
Comment No. 15 below, separate bond issues would be 
required for these projects totaling $996 million. 

With regard to capital improvements to the water system, 
the PUC has developed a long-term capital improvement 



1 According to Ms. Karol Ostberg of the PUC, the PUC will manage its debt portfolio to achieve an 
overall objective of minimizing costs and maintaining flexibility to respond to changing market 
conditions and a dynamic capital improvement program. The bulk of the debt is anticipated to be 
long-term fixed-rate revenue bonds which have the advantage of known financing costs over the 
useful life of the asset being financed. The PUC also anticipates using certain types of variable rate 
debt to take advantage of lower average interest rates. Use of such instruments would be 
particularly advantageous during construction of capital projects, by lowering the cost of capitalized 
interest. In addition, certain types of variable rate debt may be issued to permanently fund project 
costs. The added benefit of overall lower interest rates associated with variable rates is somewhat 
offset by the interest rate volatility associated with variable rate debt, so such debt would not exceed 
25 percent of the entire bond issuance, according to Ms. Ostberg. 

2 The regional water system provides water to the City and the PUC's 29 wholesale customers, who 
disperse the water to 1.6 million clients m Alameda, San Mateo, and Santa Clara Counties. 

3 The local water system delivers water from the regional water system throughout the City and 
stores a portion of it locally in City reservoirs. 

4 The clean water system collects, treats, and disposes City sewage and storm water. The City also 
contracts with public sector agencies in San Mateo County to provide wastewater services. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

9 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



program consisting of 77 projects 5 designed to replace or 
repair aging water system facilities since many of the 
system's components are at the end of their useful life. 
The capital improvement program is intended to address 
seismic concerns (particularly the lack of back-up 
facilities), future increases in the demand for water, and 
future regulatory requirements for the quality of drinking 
water. If this requested revenue bond authorization is 
approved by the voters in the November of 2002 election, 
the 13 year capital improvement program would start in 
2003 and would be scheduled for completion by 2016. The 
PUC would review and update the plan annually during 
this 13 year program. 

The proposed capital improvement program for the water 
system is estimated to cost $3,628 billion, which includes: 

• $2,075 billion for the actual project construction costs 
(approximately 57.2 percent of the total $3,628 billion 
cost). 

• $481 million in escalation costs assuming 3 percent 
annual inflation during the 13 year construction 
period (approximately 13.3 percent of the total $3,628 
billion cost). 

• $409 million in program contingency costs and 
management reserves (approximately 11.3 percent of 
the total $3,628 billion cost). According to Ms. Karol 
Ostberg of the PUC, this amount includes a 10 
percent margin for program contingencies for the 
purpose of completing the program on budget and on 
schedule (10 percent of total construction and 
escalation costs is $256 million). The contingency will 
only be available for changes in scope and design that 
cannot be foreseen at the capital improvement 
program's outset. In addition, there is a 6 percent 
management reserve (6 percent of total construction 
and escalation costs is $153 million). Management 
reserves are required by large capital improvement 
programs in order to manage externally imposed 
conditions, critical emergencies, and other conditions 
that cannot be predicted in advance. 



5 There are 37 regional water system projects (including three reservoirs within City boundaries 
which are considered to be regional assets), and 40 local water system projects. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



$663 million for financing costs (approximately 18.3 
percent of the total $3,628 billion cost). This amount 
comprises: 



Financing Costs 


Cost 


Costs of issuance 6 
Reserve fund deposit 7 
Bond insurance premium 8 
Capitalized interest fund 9 

Total: 


$36,277,000 

256,894,000 

18,980,000 

350,836.000 

$662,987,000 



The breakdown of these costs between regional water 
projects and local water projects is shown in the following 
table: 





Construction 


Construction 
Inflation 


Contingency & 

Management 

Reserve 


Financing 
Costs 


Totals 


Regional Water 
Local Water 

TOTAL: 


51,656,896,772 
417.854.113 

$2,074,750,885 


$395,210,072 
85,834,364 

$481,044,436 


$328,337,095 
80.590.156 

$408,927,251 


$532,327,562 
130.659.502 

$662,987,064 


$2,912,771,501 
714.938.135 

$3,627,709,636* 



* Note: Rounds to S3. 628 billion. 

All expenditures of bond proceeds for capital improvement 
program purposes, and all capital budgets, are subject to 
appropriation approval by the Mayor and the Board of 

Supervisors. 



6 Costs of issuance include (a) rating agency fees (an estimated $14,510,000 or approximately 40 
percent of the total costs of issuance), (b) bond counsel fees (an estimated $12,697,000 or 
approximately 35 percent of the total costs of issuance), (c) financial advisory fees (an estimated 
$5,442,000 or approximately 15 percent of the total costs of issuance), and (d) printing and 
distribution of official statements, and other related fees (an estimated $3,628,000 or approximately 
10 percent of the total costs of issuance). 

7 The debt service reserve fund is equal to maximum annual debt service. 

8 A bond insurance policy makes scheduled debt service payments if the issuer fails to do so. Bond 
insurance provides an issue an AAA rating and the resulting lower interest rates save more than the 
cost of the bond insurance premium, according to Ms. Ostberg. 

9 The capitalized interest fund is for bond proceeds which are reserved to pay interest on an issue for 
a period of time early in the term of the issue when capital improvement project construction is 
commencing. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

L 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

The proposed resolution to authorize a $3,628 billion 
revenue bond issue would be the largest single voter 
authorization ever put before San Francisco voters. 

Comments: Capital Improvement Program Planning 

1. In February of 1998, the PUC published a draft long- 
term Water Enterprise capital improvement plan which 
identified projects cumulatively costing an estimated $3.5 
billion and initiated development of a Program 
Management Consultant contract to assist with delivering 
such a large capital improvement program. In January of 
2000, two long-range financial reports by Bartle Wells 
Associates recommended that the PUC develop and adopt 
an integrated capital improvement program and long- 
range financial plan. In February of 2000, the State 
Auditor General recommended the completion of a long- 
range capital improvement program financial plan. In 
April of 2000, the PUC published a Water Supply Master 
Plan and a Facilities Reliability Plan which identified 
critical water system capital improvement projects, most 
of which were included in prior reports, but which failed 
to develop financing plans. On August 28, 2000, the 
Board of Supervisors authorized the first year of a four- 
year Program Management Consultant contract between 
the PUC and the San Francisco Water Alliance 10 , now 
renamed the Water Infrastructure Partners (see 
Comment No. 17). Since then, the PUC and the Program 
Management Consultant have worked to develop plans 
which (a) prioritized capital improvement projects in 
terms of their ability to improve reliability and reduce 
exposure to risk, (b) accurately estimated individual 
capital improvement projects' costs, (c) specified the 
project activities and staffing required to complete 
individual capital improvement projects, and (d) included 
financing plans. 

2. The PUC hired a permanent General Manager in 
September of 2001 who focused on further development of 
the capital improvement program. In January of 2002, 
the General Manager presented the PUC with revised 



10 The San Francisco Water Alliance was a joint venture of Bechtel Infrastructure Corporation, The 
Jefferson Company, and Sverdrup Civil, Inc. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



draft capital improvement plan documents. In response, 
the PUC requested public hearings to solicit feedback 
from local ratepayers and regional customers. Further 
revisions to the draft capital improvement program 
documents were made based on the input received at the 
public hearings, and on May 28, 2002, the PUC approved 
three key documents: 

• A Long-Term Strategic Plan for Capital Improvements 
which identifies strategic objectives and performance 
measurements to guide the capital improvement 
program. 

• A ten-year capital improvement program showing 
capital improvement program costs and schedules. 
Ms. Ostberg advises that all projects will begin 
construction within ten years, but that some may take 
up to an additional three years to close-out or 
complete, for a total of 13 years. 

• A Long-Range Financial Plan which recommends an 
optimal strategy for financing the capital improvement 
program. 

Evaluations of the Capital Improvement Program 

3. Following a recommendation from the Mayor's Public 
Utilities Infrastructure Task Force, the PUC's General 
Manager hired R.W. Beck, an independent engineering 
firm, to review the development and validity of the entire 
capital improvement program, the PUC's ability to 
successfully implement a capital improvement program of 
that size, and the long-range financial plan. Ms. Ostberg 
states that R.W. Beck was selected by the PUC General 
Manager on the basis of that firm's reputation, experience 
with similar projects, independence from the PUC (it has 
no other business with the PUC), and availability. 
Appendix 1 to this report presents a digest of R.W. Beck's 
conclusions and recommendations. 

4. In April and May of 2002, the R.W. Beck evaluation 
was reviewed by a Blue Ribbon Panel of professionals 
selected by the PUC's General Manager in consultation 
with the San Francisco Planning and Urban Research 
Association (SPUR) who had expertise in water delivery, 
infrastructure, planning, finance, and other disciplines. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 
6 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



This panel made a number of recommendations which are 
also summarized in Appendix 1 to this report. 

5. Attachment I, provided by the PUC, states that the 
PUC agrees with all of the recommendations made by 
both R.W. Beck and the Blue Ribbon Panel, and states 
that it plans to implement those recommendations over 
the next two to three years. 

Concurrent Legislative Developments 

6. The State Legislature is currently considering three 
bills which would impact the PUC's proposed capital 
improvement program. Of these three bills, SB1870 is 
supported by the PUC. SB1870 proposes to establish an 
independent entity, the San Francisco Bay Area Regional 
Water System Financing Authority, for the financing of 
regional water system projects. If enacted, SB1870 would 
reduce the amount of bond funding required by San 
Francisco by approximately 56.2 percent or $2,039 billion, 
from $3,628 billion to approximately $1,589 billion 
because 70 percent of the regional water system 
component of the PUC's capital improvement plan ($2,039 
billion of the $2,913 billion regional water system capital 
improvement program) would be financed through the 
new regional financing entity. Attachment I, provided by 
the PUC, outlines the three State bills and their potential 
impacts on the PUC's capital improvement program. 

Capital Improvement Program Funding 

7. According to Ms. Ostberg, the general provisions of the 
sale of the Water Revenue Bonds would be as follows: 

• The timing of the issuance of the water revenue bonds 
each year would be determined by market conditions 
and capital improvement project spending rates. 
While the table below aligns projected bond issuance 
dates with projected capital improvement project 
expenditures, funding in certain years could initially 
take the form of commercial paper or other variable 
rate interest debt to be refunded by later bond issues, 
if financially advantageous to the City. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

7 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



• At any given time, the PUC might have financing in 
place such as commercial paper to serve as interim 
financing during the capital improvement project 
construction phases, as well as 30 year term fixed or 
variable rate bonds to provide permanent financing 
once construction is completed. 

• The PUC expects to actively seek and take advantage 
of other financing sources as they become available, 
including State or Federal grants, extraordinary 
revenues (for example, one-time revenues from surplus 
land sales), and State revolving funds. Such 
alternative sources, if available, would reduce the 
amount of bonds which would need to be issued and 
would lower the overall capital improvement program 
costs. 

• Each type of financing would require the prior 
approval of the Mayor and the Board of Supervisors. 

• The water revenue bonds would be issued at an 
interest rate not to exceed 12 percent, or whatever 
future cap (if any) is set by State law. 

8. Attachment II, provided by the PUC, shows the 
projected debt service schedule for the proposed revenue 
bonds for the period of FY 2001-2002 through FY 2031- 
2032. Since the PUC has not yet developed a final 
financing plan, the PUC has not yet estimated the 
average and total debt service payments over the full 30 
year terms of each projected series of revenue bond 
issuances. 

9. Attachment III, provided by the PUC, shows that San 
Francisco ratepayers currently pay the second lowest 
average water rates in the Bay Area. In FY 2002-2003, 
San Francisco ratepayers pay an average monthly water 
bill of S14.43, compared to an average monthly water bill 
of $17.51 across the 12 Bay Area jurisdictions. However, 
as shown in the table below, San Francisco ratepayers' 
share of water system projects would be paid for by 
projected gradual increases in water rates from an 
average monthly bill of $16.00 in FY 2003-2004 to an 
average monthly bill of $42.89 in FY 2015-2016, a $26.89 
per month or approximately a 168.1 percent increase 
using 2003 dollars. For regional wholesale customers, the 



BOAKD OF SUPERVISORS 
BUDGET ANALYST 

8 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



unit cost 11 would gradually increase from $1.04 per unit 
m FY 2003-2004 to S2.69 per unit in FY 2015-2016, a 
SI. 65 per unit or approximately a 158.7 percent increase 
using 2003 dollars. Ms. Ostberg advises that the water 
rates of other utilities will also increase during this period 
as a result of their own capital improvement programs or 
because they are wholesale customers of the PUC. 

10. The following table presents (a) the PUC's projected 
sale of revenue bonds or other instruments, and (b) the 
impacts on residential and wholesale rates for the period 
of FY 2003-2004 through FY 2015-2016. 



11 The unit cost is expressed as dollars per hundred cubic feet of water (S/Ccf). 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

9 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



Fiscal Year 


2003-04 


2004-05 


2005-06 


2006-07 


2007-08 


2008-09 


2009-10 




(S million) 


(S million) 


(S million) 


($ million) 


($ million) 


($ million) 


(S million) 


Amount of 
















Financing Issued 
















Regional Water 


$21 


$56 


$77 


$215 


$340 


$422 


$416 


Local Water 


10 


20 


53 


67 


77 


154 


133 


Annual Total 


$31 


$76 


$130 


$282 


$417 


$576 


$549 


Average monthly 
















cost to SF 


$16.00 


$17.77 


$19.54 


$21.50 


$22.57 


$23.93 


$25.36 


ratepayers 
















Unit cost to 
















regional 


$1.04 


$1.10 


$1.15 


$1.16 


$1.17 


$1.30 


$1.52 


customers 

















Fiscal Year 


2010-11 


2011-12 


2012-13 


2013-14 


2014-15 


2015-16 


Totals 




($ million) 


($ million) 


($ million) 


($ million) 


($ million) 


($ million) 


($ million) 


Amount of 
















Financing Issued 
















Regional Water 


$529 


$253 


$207 


$174 


$139 


$64 


$2,913 


Local Water 


77 


31 


56 


37 








715 


Annual Total 


$606 


$284 


$263 


$211 


$139 


$64 


$3,628 


Average monthly 
















cost to SF 


$27.90 


$30.69 


$33.89 


$37.28 


$40.85 


$42.89 




ratepayers 
















Unit cost to 
















regional 


$1.78 


$2.06 


$2.31 


$2.48 


$2.52 


$2.69 




customers 

















11. For businesses, the proposed revenue bonds would 
result in annual water rate increases of between 4.8 and 
5.8 percent, depending on the industry, according to Ms. 
Ostberg. 

12. Ms. Ostberg states that during the public hearings 
on the PUC's proposed capital improvement program, the 
PUC received considerable public comment from all 
customer classes on the impact of the proposed bond 
measure on those least able to pay higher rates. 
Therefore, the PUC intends to initiate a rate study to (a) 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

10 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



review the PUC's rate structure, (b) ensure that rates are 
fairly distributed among customer classes, and (c) 
incorporate a means to support conservation and recycling 
initiatives. The rate study results are expected in early 
2003, after the November of 2002 election but prior to the 
first issuance of the proposed bonds and the resulting rate 
increase. Ms. Ostberg advises that this rate study cannot 
be completed earlier because its largest component, a 
demand study, requires examination of the peak demand 
period of September through October of 2002. Ms. 
Ostberg advises that a rate study has not already been 
completed because (a) the PUC lacked a permanent 
General Manager, and (b) one of the key lessons learned 
from the public hearings was the public's desire to better 
understand the PUC rates structure. 

13. At the Capital Improvements Advisory Committee 
meeting of June 28, 2002, the Controller and the Mayor's 
Director of Public Finance raised a number of concerns 
about (a) the size of the proposed bond measure, (b) the 
impact of possible State legislation, (c) the PUC's 
financial assumptions, (d) the large amount of capitalized 
interest totaling $351,836,000 or approximately 9.7 
percent of the total financing proceeds of $3,628 billion, 
(e) the impact of Proposition H and any subsequent 
referendum on the Water Enterprise credit rating and its 
ability to set water rates, and (f) alternative authorization 
and financing scenarios given Charter Section 9.107 
exceptions (see Appendix 2 to this report for a discussion 
of Charter Section 9.107). Attachment I outlines the 
PUC's response to these issues. Since the preparation of 
Attachment I, Mr. Bill Berry of the PUC, the Controller, 
and the Mayor's Director of Public Finance met on July 3, 
2002 to discuss these issues further. Mr. Berry, Mr. 
Harrington, and Ms. Moyer will be available at the 
Finance Committee's July 10, 2002 meeting to update the 
Committee on the results of their July 3, 2002 meeting. 

14. Appendix 2 to this report provides additional 
information on the PUC's Water Enterprise credit ratings, 
other financing options if voters do not approve the 
proposed revenue bonds, and Charter Section 9.107 
exceptions. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

11 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



15. As noted above, the proposed resolution does not 
cover the $996 million needed to fund the ten projects 
designed to replace or repair aging clean water facilities. 
According to Ms. Ostberg, the public outreach hearings on 
the capital improvement plan held by the PUC in the 
Spring of 2002 identified a lack of community support for 
the Clean Water capital improvement projects selected by 
the PUC and raised a number of environmental issues. 
Therefore, the PUC General Manager is recommending 
that the PUC prepare a separate, comprehensive sewer 
service master plan over the next 18 to 24 months. Ms. 
Ostberg states that the PUC anticipates bringing a Clean 
Water Revenue Bond proposal to the Board of Supervisors 
during calendar year 2004. 

Program Management Consultant 

16. On August 28, 2000, the Board of Supervisors 
approved a four-year contract between the PUC and the 
San Francisco Water Alliance 12 for program management 
services related to the capital improvement program 
(Board Resolution 754-00), subject to annual Board of 
Supervisors approval to renew the contract. 

17. On March 28, 2002, Bechtel Infrastructure 
Corporation withdrew from Contract Year 2 of the 
Program Management Consultant contract, thus 
terminating its contractual relationship with the City. 
The remaining joint venture partners, now consisting of 
Primus Industries, Inc. 13 and Jacobs Civil, Inc. 14 and 
renamed the Water Infrastructure Partners, requested 



12 The San Francisco Water Alliance consisted of Bechtel Infrastructure Corporation, Sverdrup 
Civil, Inc., and The Jefferson Company. 

13 On October 1, 2000, The Jefferson Company changed its name to Primus Industries, Inc. Mr. 
Jefferson states that he is the sole owner of Primus Industries, Inc. According to Ms. Lilhe Sunday 
of Primus Industries, Inc., on October 1, 2000 The Jefferson Company changed its name to Primus 
Industries, Inc. "to provide the necessary infrastructure required to support our rapid growth in size, 
services, and capabilities. We operate as Primus Industries, Inc. with two subsidiary companies: 
Primus Transportation Company, and Primus Infrastructure Company." Mr. Jeet Bajwa of the PUC 
states that when The Jefferson Company's name change to Primus Industries, Inc. took place on 
October 1, 2000, the Human Rights Commission was advised immediately and Human Rights 
Commission certification was issued on March 12, 2001. However, for the purposes of the former 
San Francisco Water Alliance contract, The Jefferson Company name was left unchanged. 

14 On March 1, 2002, Sverdrup Civil, Inc. was purchased by Jacobs Choi, Inc. and ceased to exist as 
a separate entity. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
12 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



that the PUC reassign the program management services 
contract to their reconstituted joint venture, with Jacobs 
Civil, Inc. as the lead partner responsible for meeting the 
contract requirements, the role formerly performed by 
Bechtel Infrastructure Corporation 15 . PUC staff 

determined that the reconstituted joint venture met or 
exceeded each of the original Request for Proposals' 
requirements and was therefore qualified and competent 
to assume responsibility for completing the contract term. 
The PUC accepted the proposed reassignment of the 
contract to the reconstituted joint venture, subject to 
Board of Supervisors approval to (a) reassign the contract, 
(b) waive the competitive procurement requirements of 
Administrative Code Sections 6.40 et seq., and (c) release 
the remaining contract funds for Contract Year 2 which 
expires on September 21, 2002. Board of Supervisors 
approval was granted on June 17, 2002 (File 02-0905). 
According to Mr. Jeet Bajwa of the PUC, it is the PUC's 
intention to request that the Board of Supervisors 
approve Contract Year 3 continuation of the contract with 
the renamed Water Infrastructure Partners (September 
22, 2002 through September 21, 2003). 

18. The Controller has performed three audits of the 
Program Management Consultant's performance against 
its task orders, short-term performance measures, and 
long-term performance measures (July 20, 2001, October 
2, 2001, and April 8, 2002). In August and September of 
2001, an independent Peer Review Panel reviewed the 
work of the Program Management Consultant 16 . In May 
of 2002, the PUC completed a new performance 
evaluation of the Program Management Consultant which 
concluded that during the first half of Contract Year 2 the 



15 In a March 28, 2002 letter to the PUC's General Manager, Mr. James Jefferson, President and 
CEO of Primus Industries, Inc. and Ms. Darlene Gee, Vice-President of Jacobs Civil, Inc. state: "We 
propose to rename our joint venture, if desirable, to allow a clean break from the association with 
past perceptions. We would restructure the joint venture and designate Jacobs Engineering as the 
lead. Everything else would remain unchanged." 

1G The independent Peer Review Panel, convened to meet the Board of Supervisors requirement for 
an independent peer re-view of Contract Year 1 of the San Francisco Water Alliance contract, 
comprised Mr. Paul Findley and Mr. Peter Talbot of Malcolm Pirnie, Inc. (a private company of 
environmental engineers, scientists, and planners) and Dr. Douglas Selby, Deputy City Manager of 
the City of Las Vegas. A key recommendation of that peer review was that performance measures 
should be established within each task order issued to the Program Management Consultant by the 
PUC. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

13 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



Program Management Consultant performed as follows. 
On a scale of 1 (did not deliver as agreed), 2 (partial 
fulfillment), and 3 (delivered as agreed), the Program 
Management Consultant scored 3 for "adherence to 
project schedule" and "task management", 2.61 for 
"adherence to project schedule," and 2.58 for "quality of 
work" in relation to 12 tasks. Therefore, the PUC 
evaluated the Program Management Consultant as fully 
meeting half of its key performance measures. 

19. The Budget Analyst notes that while the PUC 
intended to fully integrate PUC and Program 
Management Consultant staff during the first two 
contract years, such integration has not taken place. The 
Budget Analyst also notes that the ability of the Program 
Management Consultant to achieve significant, 
documented, and verifiable capital improvement program 
management savings remains unproven. 

Workforce Issues 

20. Since the Budget Analyst's first report on the 
Program Management Consultant contract issued in 
August of 2000, the Budget Analyst has noted the PUC's 
historic inability to fill vacant engineering positions in the 
PUC's Utilities Engineering Bureau. According to Ms. 
Therese Madden of the PUC, as of July 3, 2002 the 
Utilities Engineering Bureau has 60 vacancies out of 197 
positions in total (approximately 30.5 percent). Of these 
60 vacancies, 40 are in engineering classes, out of 119 
engineering positions in total (approximately 33.6 
percent), and ten are in technical classes. Ms. Madden 
states that the PUC has initiated the hiring process for 11 
of the 40 vacant engineering positions. Ms. Madden 
advises that the majority of the remaining 49 vacant 
engineering positions are in classifications which now 
have eligible lists, and therefore hiring appointments 
could be made immediately. However, the hiring process 
has not been initiated for those 49 vacant positions 
because such positions are to work on capital 
improvement projects funded by the proposed revenue 
bonds which have yet to be approved by the voters. Ms. 
Madden states that the Utilities Engineering Bureau does 
plan to initiate the selection processes for these 49 vacant 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



positions in the Fall of 2002, in advance of the voters' 
approval of the proposed revenue bonds, so that potential 
candidates can be hired and begin work as soon as the 
revenue bonds are approved. 

21. For FY 2002-2003, the PUC requested $1,849,491 to 
establish a Capital Improvement Program Team to 
manage the capital improvement program. The Budget 
Committee has recommended this request for approval by 
the Board of Supervisors. The requested $1,849,491 
includes $1,186,491 for 18 new positions (13.50 FTEs in 
FY 2002-2003) and $663,000 for contractual services, 
materials and supplies, and equipment. Ms. Madden 
states that the PUC has implemented a hiring plan to 
staff the new Capital Improvement Team by October 1, 
2002. Recruitment has been underway for some time for 
the program manager positions, and the PUC is initiating 
an examination process to establish a permanent list for 
such positions. Selections are currently being made from 
the Senior Engineer and Association Engineer lists. The 
PUC intends to make all administrative and clerical 
appointments by October 1, 2002, according to Ms. 
Madden. Attachment IV, provided by the PUC, contains 
the proposed capital improvement program staffing plan 
and an explanation of the FY 2002-2003 capital 
improvement program objectives. 

Charter Amendments 

22. On July 5, 2002, the Rules and Audits Committee 
will consider two proposed ballot measures to amend 
Charter sections pertaining to the PUC. The first 
proposed Charter amendment (File 01-2056) would alter 
PUC governance, goals and objectives related to energy, 
the PUC's powers related to electrical energy, siting of 
energy facilities, and rates for energy services. This 
proposed Charter Amendment would not alter the 
existing requirement that revenue bonds require either 
voter approval or, under the exceptions permitted by 
Charter Section 9.107 (as outlined in Appendix 2 to this 
report), approval of three-quarters of the Board of 
Supervisors. However. this proposed Charter 
Amendment would authorize the PUC to enter into 
agreements with other governmental entities, including 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

15 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



the proposed San Francisco Bay Area Regional Financing 
Authority, in connection with financing and constructing 
capital improvement projects that benefit San Francisco 
and its regional customers. Such agreements may 
provide for the issuance of debt on behalf of San 
Francisco. 

23. However, the second proposed Charter amendment 
(File 02-0887) would establish the PUC's exclusive control 
of water and clean water utilities; rate setting standards 
and methods; the transfer of surplus funds between 
utilities; independence in contracting; purchasing, 
hiring, and selection of contractors; reporting and 
planning requirements; and authorization of revenue 
bonds or other financing methods without voter approval, 
if this proposed Charter Amendment is adopted by the 
voters. Ms. Ostberg states that to the extent that this 
proposed Charter Amendment gives the PUC authority to 
issue bonds without voter approval, this Charter 
Amendment would negate the need for the proposed 
revenue bond issuance of $3,628 billion. 

Fire Department 

24. While the PUC is responsible for managing the low- 
pressure water system, the Fire Department is 
responsible for managing the City's high pressure water 
system, the Auxiliary Water Supply System (AWSS). The 
Capital Improvements Advisory Committee expressed 
oncern that the PUC has not consulted the Fire 
Department about the impact of its water system capital 
improvement projects on the AWSS. In Attachment I, Mr. 
Berry states that the proposed capital improvement 
program would not significantly affect, either positively or 
negatively, the performance or reliability of the Fire 
Department's AWSS. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

16 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Summary of the 

Issues Noted by the 

Budget Analj'st: 1. The Budget Analyst notes a number of issues which 

could impact the size of, and potential voter support for, 

the proposed revenue bond issuance: 

• Potential State legislation, most notably SB 1870, 
would, if enacted, reduce the amount of bond funding 
required by San Francisco by approximately 56.2 
percent or $2,039 billion, from $3,628 bilhon to 
approximately $1,589 billion. 

• The PUC's projected 168.1 percent increase in water 
rates payable by San Francisco ratepayers over the 13 
years of the capital improvement program would 
adversely impact San Francisco ratepayers who 
currently pay the second lowest water rates in the Bay 
Area. 

• The PUC will not be able to issue its proposed rate 
study report, which will ensure that rates are fairly 
distributed among customer classes, before the 
November of 2002 election. 

• The Proposition H water rate and sewer service charge 
freeze has had a negative impact on the PUC's credit 
ratings, increasing interest rates by an estimated 0.2 
percent, which increases debt service by $2,000,000 
annually for every $1 bilhon of revenue bonds issued. 
Proposition H does not expire until July 1, 2006. 

• The Controller and the Mayor's Director of Public 
Finance have expressed concerns about the PUC's 
financial assumptions and the provision of a large 
amount of capitalized interest pertaining to this 
proposed $3,628 billion revenue bond issue. 

• The need for the proposed revenue bond issue could be 
negated if voters approve a Charter Amendment 
proposed for the November of 2002 ballot (File 02- 
0887) which would give the PUC authority to issue 
bonds without voter approval. 

2. The Budget Analyst notes that the PUC's Program 
Management Consultant contract with the San Francisco 
Water Alliance, now reconstituted as the Water 
Infrastructure Partners, has, to date, failed to (a) fully 
integrate PUC and contractor staff, and (b) provide 
significant, documented, and verifiable capital 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

17 



Memo to Finance Committee 

Jul}' 10, 2002 Finance Committee Meeting 

improvement program management savings despite the 
PUC's assurances to the Board of Supervisors that such 
savings are achievable. 

3. The Budget Analyst also notes the PUC's historic 
difficulty in filling vacant engineering positions in the 
PUC's Utilities Engineering Bureau which is a key 
resource for implementing the proposed capital 
improvement program funded by the proposed revenue 
bonds. 

4. At the Capital Improvements Advisory Committee 
meeting of June 28, 2002, the Controller and the Mayor's 
Director of Public Finance raised a number of concerns 
about (a) the size of the proposed bond measure, (b) the 
impact of possible State legislation, (c) the PUC's 
financial assumptions, (d) the large amount of capitalized 
interest totaling $351,836,000 or approximately 9.7 
percent of the total financing proceeds of $3,628 billion, 
(e) the impact of Proposition H and any subsequent 
referendum on the Water Enterprise credit rating and its 
ability to set water rates, and (f) alternative authorization 
and financing scenarios given Charter Section 9.107 
exceptions. Mr. Bill Berry of the PUC, Mr. Harrington, 
and Ms. Moyer met on July 3, 2002 to discuss these issues 
further. Mr. Berry, Mr. Harrington, and Ms. Moyer will 
be available at the Finance Committee's July 10, 2002 
meeting to update the Committee on the results of their 
July 3, 2002 meeting. 

Recommendation: Approval of the proposed resolution is a policy matter for 

the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

18 



Appendix 1 
Page 1 of 5 

APPENDIX 1: INDEPENDENT EVALUATIONS OF THE CAPITAL 
IMPROVEMENT PROGRAM 

R.W. Beck 

R.W. Beck's May 21, 2002 report on the capital improvement plan concluded that: 

• While supportive of the capital improvement program planning approach, Bay 
Area Water Users Association (BAWUA) members are frustrated by the PUC's 
slow progress in implementing the capital improvements. BAWUA has 
introduced State bills to create an agency which would allow BAWUA members 
to directly fund needed regional water system capital improvements. 

• BAWUA members are concerned whether the PUC intends to continue to be a 
regional water provider that will meet BAWUA members' water supply 
requirements for the long term. 

• The criteria for selecting, sizing, and measuring the performance of capital 
improvement program projects needs to be more fully developed, with 
quantifiable objectives and standards. 

• The proposed capital improvement projects are necessary to maintain the 
regional and local water systems. 

• The proposed capital improvement projects are at varying levels of definition 
and investigation, so the accuracy of the cost and schedule information varies. 
The PUC and its Program Management Consultant had endeavored to 
standardize the costs and schedules. R.W. Beck characterized this work as 
"diligent" and "methodical," stating that the approach followed by the PUC and 
the Program Management Consultant was "consistent with, and probably better 
than that used by most similar utility systems in preparing CIP programs." 

• The consolidated capital improvement program/long-range financial planning 
process clearly prioritizes projects, ensures better cost estimates, and provides a 
valid basis for approval and adoption. 

• Annual review of the capital improvement program by the PUC is appropriate. 

• Historically, the PUC has tracked capital improvement program costs by 
classification of project which makes it difficult to evaluate the performance of 
individual projects. 

• The long-range financial plan is logically constructed and is based on reasonable 
financial assumptions. 



19 



Appendix 1 
Page 2 of 5 

• Proposition H 1 poses serious threats to the PUC's ability to maintain satisfactory 
reserves and coverage ratios to support the debt that will be needed to fund the 
capital improvement program. 

• The community needs better information on the costs and trends in other cities 
facing similar issues. 

R.W. Beck further concluded that there is a significant risk that the planned level of 
project delivery will not be achieved, especially in the initial years of the program, 
because of: 

• The relative inexperience of the PUC's Capital Improvement Program Manager 
in implementing a capital improvement program of this magnitude and 
complexity. 

• The vacancy of the Assistant General Manager for Infrastructure position. 
According to Mr. Jeet Bajwa of the PUC, this position has been vacant since 
November of 2001. After several internal PUC candidates were considered, the 
PUC hired an external recruitment consultant to advertise the position in May 
of 2002. Ms. Ostberg advises that an interim Assistant General Manager for 
Infrastructure, Mr. Donald Birrer, a former PUC General Manager, was 
appointed on July 1, 2002, while the national recruitment search continues. The 
PUC expects to fill the position by September of 2002, according to Ms. Ostberg. 

• The PUC's cumbersome hiring practices. 

• The status of the program/project monitoring and controls system. Mr. Bajwa 
states that an evaluation of several control system tools is currently underway, 
with a decision expected to be made in December of 2002. 

• The potential 12 to 24 month delay in hiring a new program management 
services contractor if the current Program Management Consultant is replaced. 



1 Proposition H, approved by the voters on June 2, 1998, freezes water rates at their current levels 
until July 1, 2006, proposed to the following exceptions: 

• The rate freeze does not apply to the fees charged to customers located outside of San Francisco. 

• The rate freeze could be suspended if the City declared an emergency, as defined by Charter 
Section 3.100. 

• The rates could be increased to repay the money borrowed through the City's issuance of bonds 
for improvements to the water system approved by the voters in November of 1997 (Propositions 
A and B), but such increases cannot exceed a total of 18 percent during the period between July 
1, 1998 and July 1, 2006. 

• The rates could be increased to repay money borrowed from further improvements to the water 
system approved by voters in the future. 

The effective date of Proposition H, July 1, 1998 followed two years of rate freezes self-imposed by 
the PUC. Therefore, Proposition H froze rates at their 1996 levels through June 30, 2006, with the 
exception of the 18 percent increase allowed for debt service related to Propositions A and B Water 
Revenue Bonds. Of the $304,000,000 authorized by Propositions A and B, the issuance of 
$140,000,000 in Water Revenue Bonds during FY 2001-2002 necessitated an 8.65 percent average 
rate increase for retail customers. The anticipated issuance of the remaining $164,000,000 in Water 
Revenue Bonds during FY 2002-03 will necessitate a further 8.60 percent average rate increase for 
retail customers, for a compounded cumulative rate increase of 17.99 percent over two years, thereby 
hitting the 18 percent cap imposed by Proposition H (File 02-0904) 



20 



Appendix 1 
Page 3 of 5 

• The need for a tenfold increase in the rate of project delivery. The PUC has 
historically developed and implemented capital projects at a slow pace. 

• The lack of project accountability related to cost and schedule. 

• The lack of an Asset Management Plan to follow-up on capital improvement 
projects after completion. 

• The cumulative effect of all of the tasks scheduled to be accomplished over the 
next 12 months. 

Based on the above conclusions, R.W. Beck recommended that the PUC: 

• Coordinate with BAWUA to (a) refine the Regional Water Master Plan to reflect 
mutually agreeable performance standards, (b) conduct an integrated resources 
management plan, and (c) evaluate alternative regional associations for 
implementing critical regional water improvements. 

• Formally adopt the capital improvement program, establish a process for the 
annual update, reporting, and/or approval of changes, and declare that the PUC 
intends to be a long-term regional provider of water. 

• Continue to use the cost model, capital improvement program scheduling, and 
"optioneering" 2 tools developed over the last two years. 

• Make hiring an Assistant General Manager for Infrastructure a top priority to 
(a) manage external communications and expectations, and (b) develop a 
Business Plan with the Program Management Consultant. 

• Establish a joint venture between the PUC's Capital Improvement Program 
Group and the Program Management Consultant to establish a clear and 
integrated working relationship between the two organizations. Such an 
arrangement is not unusual in implementing major public sector projects with 
private consultants, according to R.W. Beck. 

• Develop a dual-track or contingency plan approach for capital improvement plan 
implementation during the first several years. 

• Develop an Asset Management Plan to track future system maintenance and 
capital replacement requirements. 

• Implement a capital improvement program oversight committee to conduct an 
annual review of the capital improvement program. 

• Implement an internal Technical Advisory Committee to provide oversight of 
individual capital improvement program projects. 

• Streamline PUC review and approval processes. 

• Capitalize interest over three years rather than two years to better represent the 
costs incurred prior to project commercialization. 



2 "Optioneering" is a process which uses alternative analyses to (a) identify the real project needs, 
(b) determine the appropriate evaluation criteria, (c) evaluate solutions against those criteria, (d) 
select the optimum project, (e) define the design base, and (f) obtain engineering and customer 
concurrence. The optioneering assessment should include capital and operating costs, specification 
requirements, environmental implications, and preliminary schedules. 



21 



Appendix 1 
Page 4 of 5 

Take the steps necessary to protect bond ratings given the capital improvement 
program's debt financing requirements. 

Review the formula for calculation of Suburban Water Revenue Requirements 
when the Master Water Sales Contract is renewed. If possible, the PUC should 
amend the Master Water Sales Contract (which is due to expire on June 30, 
2009) prior to any additional bond issues. If revenues can be more closely tied to 
debt service, the financial community's confidence should be enhanced. 



Blue Ribbon Panel 

In April and May of 2002, the R.W. Beck evaluation was reviewed by a Blue Ribbon 
Panel of professionals with expertise in water delivery, infrastructure, planning, 
finance, and other disciplines, convened by the San Francisco Planning and Urban 
Research Association (SPUR) 3 . The Blue Ribbon Panel concluded that the R.W. 
Beck evaluation was "very competent, comprehensive, rigorous, accurate and on 
target for this stage in the [capital improvement] program." The Blue Ribbon Panel 
further recommended that: 

• Develop project management and accounting mechanisms which allow for real- 
time assessment of project status and cost-run rates, and which are consistently 
applied to all capital improvement projects. 

• Fully integrate the Facilities Rehab ility Program (seismic) and the Water 
Supply Master Plan (conservation, desahnation, and recycling), and develop 
detailed, regularly updated system recovery plans. 

• Clearly delineate seismic design, water reliability, and drought supply 
standards. The capital improvement program should be flexible enough to adapt 
to higher water treatment standards in the future. An analysis should be 
conducted of whether system replacement every 100 years is an acceptable life 
cycle. 

• Explain to the public the reasons for potential uncertainties in project cost 
estimates in order to allay pubhc concerns about budget overruns. 



3 The panel members were (a) Jim Chappell, SPUR, (b) Margaret Bruce, Silicon Valley 
Manufacturing Group, (c) Dennis Diemer, East Bay Municipal Utility District, (d) David Dowall, 
University of California, (e) Jeanne Myerson, San Francisco Chamber of Commerce, (f) John Wise, 
Natural History Institute, and (g) Greg Zlotnick, Santa Clara Valley Water District. 



22 



Appendix 1 
Page 5 of 5 

Report on the projects planned and completed pursuant to Propositions A and 
B 4 , as well as an assessment of who those projects relate to the capital 
improvement program. 

Develop a larger policy context to guide implementation and define priorities in 
terms of environmental stewardship, environmental justice, stakeholder 
involvement, the PUC's role, regional service commitments, integrated resource 
planning, and regional crisis planning. Once policies and goals are established, 
they should be translated into performance measures. 

Streamline contracting procedures and incorporate penalties for cost overruns, 
sharing of cost savings, and bonuses for completion ahead of schedule. 
Clearly differentiate between projects which require permanent staff (for 
ongoing utility functions) and projects which require consultants (for time- 
defined tasks). 

Develop a rate structure which includes incentives for suburban customers to 
reduce peak water usage. Reduction of future peak demands could reduce the 
size of future facilities and, therefore, capital improvement program costs. 
Take account in the long-range financial plan of lower interest rates for bond 
money. 



4 In November of 1997, voters approved 5157,000,000 of Water System Reliability and Seismic 
Safety Bonds and $147,000,000 of Safe Drinking Water Revenue Bonds, for a total of $304,000,000. 
According to Ms. Ostberg, the PUC spent the first 18 months planning and designing the 
construction projects and putting a commercial paper program into place. While the ordinances 
indicated that revenue bonds would be the ultimate funding source for the projects authorized by 
Propositions A and B, from July of 1999 the PUC used commercial paper to fund the initial 
expenditures because commercial paper provided greater flexibility and lower interest rates. The 
PUC issued $140,000,000 of these bonds in August of 2001, of which approximately $85,000,000 was 
used to refund outstanding commercial paper notes, and the remaining $164,000,000 is anticipated 
to be sold in FY 2002-03. The proceeds of that second issue will, after payment of issuance costs, be 
used to retire all outstanding commercial paper notes, and the remainder will be applied towards 
approved Proposition A and B projects. Of the seismic and safety projects, at February 28, 2002, 35 
percent were complete, 57 percent were underway, and 8 percent had not been started. Of the water 
quality projects, at February 28, 2002, 28 percent were complete and 72 percent were underway. 



23 



Appendix 2 
Page 1 of 2 

APPENDIX 2: FINANCING ISSUES 

Water Enterprise Credit Rating 

On June 10, 2002, the Budget Analyst issued a Review of Best Practices for 
Financing Large Capital Improvement Projects at Municipal Utilities in the State of 
California, which was prepared in conjunction with the Legislative Analyst's Office, 
the Mayor's Director of Public Finance, and the PUC. In that report, the Budget 
Analyst concluded that the Proposition H rate freeze has had a negative impact on 
the Water Enterprise's credit ratings. 

Prior to the rate freeze, Moody's rated the Water Enterprise as "Aa" and Standard 
and Poor's rated the Water Enterprise as "AA with a stable outlook." Now, Moody's 
rates the Water Enterprise as "Al" and Standard and Poor's rates it as "A+ with a 
stable outlook." Of the 12 major Californian public utilities surveyed by the 
Legislative Analyst's Office, the Water Enterprise (in combination with the Clean 
Water Enterprise) had the lowest Moody's and Standard and Poor's ratings. Both 
rating agencies advised the Legislative Analyst's Office that ratings upgrades would 
not occur until the Water Enterprise's financial profiles, as measured by factors 
such as debt service ratios, improve dramatically, coupled with reassurances that 
the capital improvement program would be implemented and supported with a 
credible and sustainable financial plan. Such financial improvements could only 
occur by increasing water service rates and obtaining rate-making authority to 
further increase water service rates in the future in order to ensure financial 
stability, flexibility over capital improvement program implementation, and funding 
authorization. 

Financial projections for the Water Enterprise indicate that its financial viability 
will largely be maintained through FY 2006-2007, and that the City will be able to 
meet the debt service coverage requirements contained in the Water Revenue Bond 
covenants 1 . However, these projections do not include funding the capital 
improvement program's water projects. The Mayor's Director of Public Finance, 
Ms. Monique Moyer, estimated that the Water Enterprise's lowered credit ratings 
would result in a 0.2 percent increase in interest rates if the PUC issued new 
revenue bonds today, which is $2,000,000 of additional debt service annually for 
every $1 billion of revenue bonds issued. 



1 Debt service coverage requirements in the revenue bond indentures require that net revenues, 
together with unappropriated fund balances, in each fiscal year must be equal to at least 1.25 times 
more than the revenue bond annual debt service due in that fiscal year. 

24 



Appendix 2 
Page 2 of 2 



Other Financing Options if Insufficient Voter Support 



According to the Long-Range Financial Plan, without additional voter-approved 
debt, capital investment in the water system will be limited to the approximately 
$20,000,000 annually which can be supported by operating revenues. Attachment I, 
provided by the PUC, explains the full range of options available to the PUC if the 
proposed bond measure was not passed by the voters. These options are: 

• Delaying projects until voter approval is secured. 

• Delaying replacement and repair projects until after the July 1, 2006 expiration 
of the Proposition H rate freeze, at which time three-quarters of the Board of 
Supervisors could approve such projects (barring any other voter-imposed 
restriction). 

• Losing PUC control of the regional water system to a regional financing 
authority. 

The Budget Analyst notes that there is also the option of entering into an 
agreement with regional water service customers, and perhaps with the State, to 
permit regional participants to directly finance regional projects and jointly assume 
the risks involved. Under this scenario, the city would pay one-third of the cost of 
such projects by making payments to a Joint Powers Authority formed by its 
customers. This approach would raise issues about the ownership of improvements, 
operation of the regional system, and the governance and powers of the Joint 
Powers Authority. 



Charter Section 9.107 

There are exceptions to the voter approval requirement of Charter Section 9.107 
which mandates that the issuance of revenue bonds for the water system be 
approved by a simple majority of the electorate. Revenue bonds can be issued for 
the water system with a three quarters approval of the Board of Supervisors if the 
proceeds of such bonds are used to: (a) comply with a State or Federal order, (b) 
reconstruct or replace existing water facilities under the PUC's jurisdiction, or (c) 
create or maintain alternative energy sources. 

In Attachment I, Mr. Bill Berry of the PUC advises that "a portion of the projects 
for the local water system qualify for financing pursuant to this provision." 
However, Mr. Berry notes, as a result of the Proposition H rate freeze, rates could 
not be raised to fund debt service on bonds that do not have voter approval. 
Therefore, issuance of bonds under Charter Section 9.107 would be restricted until 
after July 1, 2006, and could be restricted by future voter action. 



25 






Page 1 of 6 

San Francisco Public Utilities Commission 



MEMORANDUM 




DATE: July 3, 2002 

TO: Board of Supervisors' Budget Analyst 

FROM: Bill Berry, Assistant General Manager 

for Finance fk Administration, 5FPUC 

SUBJECT: Water Bond Measure (File 02-0910) 



cc: Patricia E. Martel, GM, SFPUC 



Summary 

This memorandum is intended to respond to certain questions raised by the Board of 
Supervisors' Budget Analyst In its review of the proposed bond measure for the Water 
Enterprise. 

Follow-up to RW Beck & Blue Ribbon Panel 

As noted in the Budget Analyst's report, the SFPUC retained RW Beck to review its proposed 
Capital Improvement Program and Long-Range Financial Plan. RW Beck was selected by the 
5FPUC based on Beck's national reputation for providing Independent reviews associated 
with Bond Financings and capital programs In the water and wastewater areas, and because 
RW Beck had not provided other consulting or engineering services to the SFPUC in the 
past. 

RW Beck's report provides a review of three areas: 

a CIP Process: RW Beck reviewed the development and validity of the CIP as proposed 
by SFPUC staff. 

a CIP Implementation: RW Beck reviewed the SFPUC's ability to successfully deliver 
the proposed program in an efficient and timely manner. 

n CIP Revenue Requirements: RW Beck reviewed the proposed Long-Range Financial 
Plan. 

In general, RW Beck concluded that the proposed CIP was developed through a 
Comprehensive Process, that the CIP projects are good and necessary, and that the CIP 
effort and level exceeded the norm. In addition, RW Beck concluded that the LRFP was 
logically constructed and functionally correct, and that the financial assumptions are 
reasonable. 

In its review of CIP implementation, RW Beck noted a number of challenges, including 
leadership concerns, staffing and hiring, and concerns related to the SFPUC's program 
management consultant. RW Beck provided a number of specific recommendations, with 
which the SFPUC concurs completely. The SFPUC has already initiated follow-up in a number 
of key areas: 

n Leadership: The SFPUC has hired Don Blrrer (formerly Executive Director of the 
Clean Water Program and General Manager of the SFPUC) as Interim Assistant 
General Manager for Infrastructure to provide high-level leadership to the CIP. The 
SFPUC's new CIP Group and its Utilities Engineering Bureau, led by Karen Kublck and 
Michael Quan, respectively, will report to Mr. Birrer. In addition, the SFPUC has a 
recruitment effort underway to identify and hire a permanent AGM for Infrastructure, 



26 



JUL.-G3-2002 17:20 



415 4S7 5258 



98K 



P. 01 



Water Bond Measure (File 02-0910) -2- pa § e Z ot 6 July 3, 2002 

with the expectation that this process will be completed by the end of September 
2002. 

a Program Management Consultant: With the concurrence of the Board of Supervisors, 
the SFPUC has retained the Water Infrastructure Partners, led by Jacobs Engineering 
and Primus Inc., as Its program management consultant following the departure of 
Bechtel from the San Francisco Water Alliance joint venture. 

a Staffing and Hiring: The SFPUC has undertaken a concerted effort to Identify and 
hire qualified candidates to fill positions critical to implementing the capital 
improvement program. The initial results of a widespread recruiting effort are 
encouraging and we expect to have the key positions filled within the next few 
months. 

h Other Recommendations: The SFPUC concurs with most of the implementation- 
related recommendations from RW Beck and is committed to implementing them 
under the direction of the AGM for Infrastructure and with the support of other 
departments of the SFPUC. 

As noted in the Budget Analyst's report, an independent Blue Ribbon Panel, at the request 
of the SFPUC's General Manager, reviewed the RW Beck evaluation. In addition to their 
conclusions about the excellent quality of RW Beck's review, the Panel provided a number of 
policy recommendations to the Commission. The SFPUC concurs with these 
recommendations and plans to implement them. 

POTENTIAL IMPACT OF STATE LEGISLATION 

The Budget Analyst's report notes the three bills under consideration by the California State 
Legislature that could impact San Francisco's control and operation of the Hetch Hetchy 
Water System. These bills are further described below: 

b SB 1870 (sponsored by State Senator Jackie Speier): This bill has been 
approved by the State Senate, Is now pending in the Assembly, and the Governor 
has indicated his intention to sign it. Effective January 1, 2003, SB1870 would 
establish the San Francisco Bay Area Regional Water System Financing Authority to 
assist in financing construction of projects on the regional Hetch Hetchy system. 
Upon passage, it would be possible for the Authority to issue revenue bonds on 
behalf of the wholesale customers of the water system to finance regional projects. 
The Senate has approved this legislation, but passage by the Assembly is not 
expected until August. The Governor has indicated he will sign it. 

This could effectively reduce the proposed bond measure by approximately $2 billion. 
It would still be necessary, however, for San Francisco voters to approve bond 
financing for the San Francisco share of the cost of capital improvement projects on 
the regional system ^approximately $900 million for the proposed CIP) and to fund 
projects related to the local distribution system (estimated at $715 million). 

n AB1823 (sponsored by Assemblyman Lou Papan): AB1823 would require the 
City to adopt a Capital Improvement Program and Emergency Response Plan by 
February 2003. The City would be required to complete nine specific regional water 
projects within a specific timeframe contained within the bill. The entire regional 
Capital Improvement Program would be subject to oversight by the State 
Department of Health Services (DHS), a role that heretofore they have not 
performed nor are equipped to perform within the state. The bill also further extends 
this DHS oversight on the operation and maintenance of the regional water system, 
including budgets and power operations. There are many other portions of the bill 
that the City has also found to be disagreeable. The City continues to oppose this bill 



27 

riJL-03-2002 17=21 415 4B7 5256 33'. =.02 



Water Bond Measure (File 02-0910) 



-3- Pa § e 3 of 6 July 3, 2002 



AB2058 (sponsored by Assemblyman Lou Papan): AB2058 creates the Bay 
Area Water Supply and Conservation Agency, which would have the ability to plan, 
finance, build, and operate facilities for collection, transmission, reclamation, reuse, 
and conservation. The Agency could also acquire water and water rights, develop 
and store water, and sell water. 

If SB 1870 (Speier) were enacted, the San Francisco Bay Area Regional water 
System Financing Authority would be charged with Issuing revenue bonds for the 
SFPUC's Regional Water Capital Improvement Program. In contrast, the Agency 
created by AB 2058 would be able to build various local water projects for the 29 
wholesale customers who have agreed to participate in the authority, separate and 
distinct from the Hetch Hetchy system, AB 2058 would not impact the SFPUC's CIP. 

R&R Project Financing without Voter Approval CCharter Section 91 

Under Charter Section 9.107, the SFPUC may, upon vote of three-quarters of the Board of 
Supervisors, Issue revenue bonds "for the purpose of the reconstruction or replacement of 
existing water facilities" (R8lR Bonds). As a result of the Proposition H rate freeze, rates 
could not be raised to fund debt service on bonds that do not have voter approval. 
Therefore, Issuance of bonds under this provision of the Charter is restricted until after July 
1, 2006, and couid be further restricted by future voter action. 

A portion of the projects for the local water system qualify for financing pursuant to this 
provision (an opinion of the City Attorney and Bond Counsel has been requested to further 
refine eligibility requirements). Therefore, It would be possible for the Board (upon the vote 
of three-quarters of the members) to approve the issuance of bonds for eligible projects 
beginning in four years. Voter approval would be necessary for non-R&R projects, or the 
bulk of regional facilities, local recycling projects, and selected other projects. 

Available Options if Bond Measure Fails 

While there is evidence of strong public support for a bond measure intended to protect the 
water system, the following options are available if the proposed bond measure fails: 

n Non-R&R projects would have to be delayed until voter approval is secured. 

h Projects eligible for R8iR status could be approved by three-quarters of the Board 
members for issuance after expiration of the Proposition H rate freeze. The CIP 
would have to be delayed until that time. 

a Given the need to complete regional system capital projects, there is a risk that the 
State Legislature would adopt legislation removing SFPUC control of the regional 
water system, authorizing the issuance of revenue bonds by the Financing Authority, 
and requiring surcharges for San Francisco retail customers to cover their allocable 
share of debt service on bonds, 

CIAC-Related Questions 

The Budget Analyst's report notes certain questions raised by the Controller and the Mayor's 
Director of Public Finance at the June 28, 2002, meeting of the Capital Improvement 
Advisory Committee (CIAC). While the SFPUC is meeting with the Controller and Director on 
July 3, 2002, to further discuss their concerns, the SFPUC believe? that its CIP and Long- 
Range Financial Plan provide the most reasonable method of estimating future costs and 
providing for uncertainty in inflation, interest rate and other assumptions. A discussion of 
the specific questions mentioned in the Budget Analyst's report is provided below: 

n Size of Proposed Bond Measure: The Commission has requested the Board place a 
$3.6 billion bond measure on the November ballot to finance water system 

28 
JUL-03-2002 17:21 415 437 5259 99* P . 03 



Water Bond Measure (File 02-0910) -4- ^age 4 ol b July 3, 2002 

improvements. As noted elsewhere In this memorandum, the creation of a Regional 
Financing Authority by SB1870 would provide a new mechanism for financing the 
share of costs supported by our wholesale customers, and reduce the required bond 
authorization to approximately $1.6 billion. The SFPUC is reasonably certain that this 
legislation will be approved and Is willing to consider a reduction in the proposed 
ballot measure authorization at this time. 

The Controller and Finance Director have questioned whether the proposed bond 
authorization might be reduced by changes in various assumptions, including some 
discussed below. It is important to note that our Long-Range Financial Plan provides 
a conservative estimate of future costs based on the cost estimates for capital 
projects contained in the CIP. We recognize that actual results will vary based on a 
variety of factors, and that we cannot provide certainty that the estimates provided 
for this program will be achieved. Nevertheless, it is important to let our ratepayers 
know what kind of rate increases they can expect to fund this program. If the 
proposed projects are executed according to the CIP schedule, the current LRFP 
provides the best estimate of the amount of required bonds and rate impacts, 

h Impact of Proposed Legislation: The potential Impact of the proposed Speier 
Legislation (SB1870) on the amount of bonds required has been addressed 
elsewhere In this memorandum. Financing projects on behalf of the regional 
wholesale customers using this mechanism represents a significant change in 
approach. Currently, costs allocated to the wholesale customers based on the Master 
Water Sales Contract. In general, projects must be completed and placed into 
service before the wholesale customers begin paying. The City must finance projects 
prior to that time, although capitalized interest Is assumed during construction so as 
not to burden City ratepayers. 

On the other hand, after projects are placed in rate base, the wholesale customers 
pay a rate of return (based on the City's embedded cost of capital) and straight-line 
depreciation. The City recovers its full cost over the life of an asset using this 
methodology. However, the Initial combination of rate of return plus depreciation 
exceeds the City's incremental debt service attributable to the wholesale customer's 
two-thirds share of project costs. This "extra" revenue has been used to keep rates 
for City customers lower than they would be if all customers, retail and wholesale, 
paid a pro rata share of debt service at all times. 

Therefore, one impact of financing wholesale costs under SB1870 will be somewhat 
higher rate Increase estimates for City customers In the future. The SFPUC believes 
that this impact can be offset somewhat by the use of capitalized interest to phase in 
debt service costs gradually. 

Note that the change in methodology would not result in a shifting of the long-term 
burden of costs between City and wholesale customers, as the wholesale customers 
pay their full share of costs under the Contract. 

n Conservative Assumptions — Contingency and management reserves: The CIP is 
built on cost estimates for each of the 77 Individual projects in 2003 dollars. These 
costs are escalated based on the length of construction for each project and a three 
percent annual inflation rate. There is an expected variance on each project cost 
estimate because the projects have not completed final design and engineering. The 
San Francisco Water Alliance reviewed each estimate and conducted a statistical 
analysis to determine what the variability of the cost estimate for the entire program 
of 77 projects would be. They recommended a total 16 percent contingency and 
reserves to provide a 75 percent confidence of delivering the entire program within 
the overall cost estimate. Therefore, the program contains $409 million of 



29 

■2002 17:22 415 437 5255 p.* 



WATER BOND mtA5URt (,riLfc U^-U31UJ - J — —£>— - •»— - juli j, ^uui 

contingency and reserves for this purpose. These provide a measure of protection 
against cost overruns on individual projects and unforeseen events or changes in 
regulations. Contingencies of this nature are recommended for capital projects and 
programs, and the SFPUC believes the level of such funds for this CIP is appropriate. 
This belief has been confirmed by the independent engineering firm, RW Beck, that 
reviewed the CIP and LRFP. 

n amount of Capitalized Interest: The LRFP assumes that interest will be capitalized 
for two years at the bond interest rate (5.5 percent) for each capital project. Without 
capitalized interest, it would be necessary to raise rates earlier and in greater 
amounts than is shown in the LRFP. The Controller questioned whether the 
capitalized Interest assumption Is based on the fact that City ratepayers must "carry" 
the cost for wholesale customers while projects are under construction. Capitalized 
interest is necessary irrespective of this factor. Without It, rates would have to be 
increased more quickly. In addition, If the projects for the Suburban customers are 
financed through the Financing Authority, as expected, capitalized Interest will be 
more necessary to protect City ratepayers against higher rate increases required as a 
result of the loss of the incremental subsidy provided by the wholesale customers 
under the Contract. 

The capitalized Interest amounts are conservative in a different sense, however. It is 
assumed that interest will be capitalized at the bond rate. It is the SFPUC's 
expectation that we will, use commercial paper or other short term instruments to 
fund a portion of construction costs. CP carries significantly lower interest rates. 
However, the SFPUC has chosen to assume the higher costs because it cannot be 
assured of access to the credit and liquidity markets for CP at all times. 
Nevertheless, to the extent CP is used, the SFPUC would need to issue fewer bonds 
than assumed by the LRFP. Note that RW Beck recommended the SFPUC capitalize 
interest for three rather than two years. The SFPUC believes that the use of CP 
mitigates against the need to increase the amount of capitalized interest assumed in 
the LRFP. 

a Impact of Proposition H or Subsequent Referenda; Proposition H effectively 
freezes rates at 1998 levels through fiscal year 2006. There remains the possibility 
of a similar measure taking effect in future years which would inhibit SFPUC's ability 
to raise rates to support bonds necessary to finance essential improvements to the 
system. 

a Alternative Scenarios using Charter Section 9.107 R&R Bonds without voter 
Approval: There are some projects which, in our opinion, may be qualified as 
" reconstruction" projects and as such could be financed without voter approval 
pursuant to the Charter. (We have requested the City Attorney to formally define 
"reconstruction" projects as it relates to the Charter.) However, bonds can only be 
supported by an increase in rates, which cannot occur under the terms of Proposition 
H period. 

Fire Department AWSS System 

The Fire Department's Auxiliary Water Supply System (AWSS) is functionally independent of 
the SFPUC's water distribution system. The AWSS storage facilities - Twin Peaks Reservoir, 
Jones Street Tank and Ashbury Tank - are filled with potable water form the PUC system, 
however, once the water enters the AWSS system it is no longer potable. There are no 
other physical connections between the two systems. 



30 

JUL-03-2002 i? -22 415 43? 5253 33.': P. £5 



Water Bono Measure (File 02-0910) -6- Page 6 of 6 July 3, 2002 

The AWSS system was conceived Following the 1906 earthquake and fire. The AWSS system 
is designed to withstand higher water pressures and ground movement than the SFPUC's 
potable water system. In addition to the system's storage facilities, the AWSS can be 
supplied with salt water by the Fire Department's two pump stations or by fire boats 
through manifolds on the water front. 

The AWSS system does not cover the entire City. The system coverage is most dense in the 
area north of Mission Street and east of Van Ness Avenue. Where it is available, however, it 
is routinely used by the SFFD in lieu of, or as a complement to, the water supply available 
through the SFPUC's distribution system. The AWSS's larger diameter lines and higher 
pressures make it a more effective fire fighting tool. 

The vast majority of the work proposed In the CIP Is in the regional water system, local 
storage, and local transmission systems. Transmission lines convey water to and between 
storage facilities, and distribution lines convey water to customers. The Fire Department's 
low pressure hydrants are connected to the SFPUC's distribution lines. 

In summary,, the proposed CIP, because of it emphasis on regional water supply and 
transmission, will not significantly effect, either positively or negatively, the performance or 
reliability of the Fire Department's AWSS. Nor will the CIP include improvements to the local 
water distribution system such that it would improve the reliability or performance of the 
AWSS. 



If you have any questions or desire additional information, please email me at 
wberry(5)puc.sf.ca.us or call me at (415) 554-2457. 



31 
BLHB-20B2 17=22 ,13 4=7 5235 » "^.t" 



M 



San Francisco Public Utilities Commission 




MEMORANDUM 



DATE: 

TO: 

FROM: 

SUBJECT: 



July 3, 2002 

Board of Supervisors' Budget Analyst 

Bill Berry, Assistant General Manager 
for Finance & Administration, SFPUC 

Water Bond Measure (File 02-0910) 



cc: Patricia E. Martel, GM, SFPUC 



The following illustrates the projected debt service relating to the Water Enterprise if the 
entire amount of proposed bonds are issued. Attached are the numerical data that supports 
this table. 



Projected Water Debt Service 



350,000 



§ 300,000 - 

o 

"JT 250,000 
o 

| 200,000 
CO 

S 150,000 

w 

a 

« 100,000 



50,000 



Proposed Bonds 



pTrEXlSTmjTSDTIflS 



Authorized Bonds 



^ J* J& 4^ rfS 



■& •£ •$■ & A 

„<a N rfy rfy r?y rfy- 



Fiscal Year 



If you have any questions or desire additional information, please email me at 
wberry(a)puc.sf.ca.us or call me at (415) 554-2457. 



32 



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34 



JO 



San Francisco Public Utilities Commission 




MEMORANDUM 



DATE: July 3, 2002 

TO: Board of Supervisors' Budget Analyst 

FROM: Bill Berry, Assistant General Manager 

for Finance & Administration, SFPUC 

SUBJECT: Water Bond Measure (File 02-0910) 



cc: Patricia E. Martel, GM, SFPUC 



The following table compares the current monthly water bills of San Francisco to other 
California water utilities. 

Comparison of Monthly Water Bills* 



Walnut Creek (CCWJ) 

Dublin-San Ramon Sani. Dist. 

San Diego 

Palo Alto 

EBMUD 

Hayvard 

Fremont (ACWD) 

Sacramento 

San Jose 

Los Angeles 

San Francisco 

Santa Clara 




$0 



$5 $10 $15 $20 $25 $30 $35 



'Comparisons among utility rates are difficult, as some systems are subsidized by otlier tax receipts. 



If you have any questions or desire additional information, please email me at i 
wberrv(g)puc.sf.ca.us or call me at (415) 554-2457. • 

I 

5 



35 



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36 



FISCAL YEAR 2002/2003 CIP PROGRAM OBJECTIVES 

The CIP will achieve the following objectives in Fiscal Year 02/03: 

Program Planning: 

■ Complete Phase I of the Facilities Implementation Plan - model various alternative 
designs to determine constructability and related costs 

■ Initiate CIP Environmental Review Process - begin programmatic and project level 
EIR documentation to facilitate timely project implementation 

■ Establish Prioritization Procedures - implement annually to reflect current needs and 
changes in scope 

■ Identify and Prioritize Critical CIP Projects - facilitate the most critical projects 
moving ahead on a critical timeline 

■ Develop Project Specific Request for Proposals (RFPs) for years 1 & 2 - procure 
specialty planning, design and construction management professional services 

■ Establish CIP Performance Measurements - measure program performance based 
upon budget, schedule, and operability 

Develop Internal Procedures: 

■ Create an Enterprise Work Breakdown Structure (WBS) - Program Manager will 
control project scope, schedule, and budget through Project Controls using a WBS to 
capture and report project information, and provide current information to stakeholders 

■ Develop Procedures for Updating the Annual CIP Budget - develop process to 
provide current budget and schedule information to the SFPUC, the Board of Supervisors 
and the Stakeholders 

■ Develop Change Order Control/Approval Process - manage contracts and track 
budget more effectively on a real time basis 

■ Develop Construction Management Procedures - standardize documentation and 
control practices for project managers to more effectively manage projects during 
construction 

■ Review Skills Inventory and Develop Staff Training Plan - based upon the assessment 
of skills and CIP requirements, utilize staff from SFPUC, DPW, and other City 
Departments in the fields of engineering, project controls, project management and 
construction management, and provide training as appropriate 

Develop and Implement Information Systems: 

■ Select Project Control System - track scope of work, budget expenditures, schedules 
and resource needs to provide a comprehensive, accurate, and timely program report to 
accommodate an enlarged database 

■ Procure Project Control System - acquire software license agreement and training 

■ Develop Project Control System Implementation Plan - develop a phased installation 
plan, to be implemented by the CIP staff, beginning with a pilot project to test and refine 
the Project Control System 

■ Procure Electronic Timecard System - this new system will replace the daily, manual 
timecards of engineering staff, by tracking project phases and engineering disciplines, to 
ensure more detailed, and timely reporting of labor costs 



36a 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



Item 6 - File 02-1070 

Department: 

Item: 



Department of Human Resources (DHR) 

Ordinance adopting and implementing Amendment No. 1 
to the two-year Memorandum of Understanding from July 
1, 2001 through June 30, 2003 between the Teamsters, 
Local No. 853 and the City and County of San Francisco 
by adding a new section to Article III.F. Additional 
Compensation which provides for the pass-through of 
State of California funds to certain represented classes 
working at Skilled Nursing Facilities. 



Description: 



The proposed ordinance would amend the existing 
Memorandum of Understanding (MOU) between the 
Teamsters, Local No. 853 and the City and County of San 
Francisco to implement provisions of the California 
Welfare and Institutions Code Section 14110.6. The 
existing MOU, for the period from July 1, 2001 through 
June 30, 2003 was approved by the Board of Supervisors 
on May 18, 2001. Under the California Welfare and 
Institutions Code Section 14110.6, the State provides 
additional revenues, or State pass-through funds, to the 
Counties to compensate health care and other employees 
who are assigned to skilled nursing facilities. Employees 
who receive the Skilled Nursing Facility (SNF) Wage 
pass-through premium must provide direct patient care to 
MediCal patients or perform maintenance work in a 
Skilled Nursing Facility that receives MediCal 
reimbursement. Employees eligible to receive the Skilled 
Nursing Facility pass-through premium include 
employees working in the Mental Health Rehabilitation 
Facility (MHRF) and Skilled Nursing Facility (SNF) at 
San Francisco General Hospital, and in the SNF at 
Laguna Honda Hospital (LHH). 

According to Ms. Alice Villagomez of DHR, previously, 
Class 7355 Truck Drivers working at LHH had not been 
considered eligible for the State pass-through premium 
funds. The State of California has since clarified that 
truck drivers are eligible for the State pass-through 
funds. The subject Amendment No. 1 to the MOU, as 
previously approved by the Board of Supervisors, would 
Board of Supervisors 
Budget Analyst 
37 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



authorize the applicable State pass-through premium pay 
for eligible Class 7355 Truck Drivers. 

In accordance with State law, the Skilled Nursing Facility 
State Pass-Through premium is to be paid retroactively to 
eligible employees working at the Laguna Honda skilled 
nursing facility between August 1, 2000 and July 31, 2002. 
For FY 2002-2003, the State pass-through premium would 
begin August 1, 2002. These State pass-through 
premiums are a portion of the MediCal reimbursement to 
the Counties for providing services in skilled nursing 
facilities. 



Comments: 1. Under the proposed MOU amendment, the total 

aggregate cost of such premiums and related expenses for 
the Truck Driver classification and all other 
classifications eligible for State of California Skilled 
Nursing Facility pass-through funds cannot exceed the 
amount of eligible State pass-through funding for such 
compensation and related costs. The eligible 

classifications covered by the Skilled Nursing Facility 
pass-through, other than Truck Drivers, have already 
been included in the provisions for the pass-through 
funding in their respective MOUs as previously approved 
by the Board of Supervisors. 

2. Total expenditures of State pass-through funds for all 
covered classifications are authorized up to $4,000,000 in 
FY 2002-2003, but payments are limited to the actual 
reimbursements received from the State. According to the 
Controller's office, the State reimbursement for FY 2002- 
2003 is estimated at $3,200,000 for all covered 
classifications. 

3. Ms. Villagomez states that for the period covering 
August 1, 2000 through July 31, 2001, the three eligible 
Class 7355 Truck Drivers at the Laguna Honda Skilled 
Nursing Facility would receive $2,997.70 each. For the 
period covering August 1, 2001 through the date of final 
approval by the Board of Supervisors of this proposed 
ordinance, the Class 7355 Truck Drivers would receive 
$1.25 for each hour worked. Ms. Villagomez further 
explains that after final approval by the Board of 

Board of Supervisors 
Budget Analyst 
38 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



Supervisors of the proposed ordinance, the Class 7355 
Truck Drivers would begin receiving premium pay at 
$1.55 per hour for work related to the Laguna Honda 
Skilled Nursing Facility. 

4. According to Ms. Villagomez, approximately 1,000 City 
employees are eligible to receive the Skilled Nursing 
Facility State pass-through premium pay. Ms. 
Villagomez states that in accordance with MOUs 
previously approved by the Board of Supervisors, the 
covered classifications for this premium include 
Registered Nurses, Licensed Vocational Nurses, Certified 
Nursing Assistants, Mental Health Rehabilitation 
Workers, Psychiatric Technicians, Carpenters, Laborers, 
Painters, Electricians, Stationary Engineers, Plumbers 
and Truck Drivers. 

5. As stated in the Attachment provided by the 
Controller's Office, the proposed ordinance would have no 
fiscal impact on the City's General Fund, since all of the 
costs for the proposed Skilled Nursing Facility premium 
pass-through would be paid for by the State. 



Recommendation: Approve the proposed ordinance. 



Board of Supervisors 
Budget Analyst 

39 



m CITY AND COUNTY OF SAN FRANCISCO OFFICE OF THE CONTROLLEI 

Edward Harringto 
Controlle 



July 1,2002 

Ms. Gloria L. Young, Clerk of the Board 

Board of Supervisors 

1 Dr. Carlton B. Goodlett Place 

San Francisco, C A 94102 

Re: File Number 021070 

Amendment No. 1 to the 2001-2003 Memoranda of Understanding (MOU) between the City and 
County of San Francisco and Teamsters, Local 853 

Dear Ms. Young: 

-In-acco-rdance-with-Qr-dmance- 92 - 9 4 , I am ^ubmltting-a-xost-analy^-e-f-an-amendmen4-te-the-200 1 - 
2003 MOU between the City and County of San Francisco and Teamsters, Local 853. Amendment No. 1 
covers the period of the current MOU, July 1, 2001 through June 30, 2003. The amendment adds a new 
section to Article III.F. Additional Compensation, which provides for the pass-through of State of 
California funds to certain represented classes working at Skilled Nursing Facilities. The effective date 
of this amendment is the date of final approval by the Board of Supervisors. 

Pursuant to the provisions of Welfare and Institutions Code Section 141 10.6, the amendment addresses a 
state program which provides for a premium to be paid to eligible employees providing services in 
skilled nursing facilities such as Laguna Honda Hospital. The number and classifications of employees 
who would receive compensation under this program has not yet been determined. 

The state budget for FY 2002-2003 includes approximately $3.2 million in funding under this program 
for San Francisco. These funds will be used exclusively to provide additional compensation for 
employees working in skilled nursing facilities in the form of premium pay. There is no impact on the 
General Fund as all of the monies for this compensation program are provided form the State of 
California. 

If you have any additional questions or concerns please contact me at 554-7500 or Pamela Levin of my 
staff at 554-7554. 



Sincerely, 




Edward M. Harrington 
Controller 

cc: Alice Villagomez, ERD 

Harvey Rose, Budget Analyst 



City Hall • 1 Dr. Carlton B. Goodlett Place • Room 316 • San Francisco CA 9410:-4694 FAX 415-554- - - 

40 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Item 7 - File 02-0726 

Department: District Attorney 



Item: 



Resolution approving increase in authorized fees for the 
First Offender Prostitution Program of up to $1,000 



Description: 



The proposed resolution would increase annual fees by an 
estimated $162,600 from $318,000 to $480,600. In 
chargeable prostitution cases where the defendant is a 
first offender with no record of violence, the District 
Attorney offers the defendant the opportunity to 
participate in a one day educational diversion program in 
lieu of prosecution. Fees have been set at $500 since 1995, 
but do not cover the full cost of the program. The District 
Attorney proposes a sliding scale fee system that will 
recover more, but not all, of total program costs in FY 
2002-03. The First Offender Prostitution Program has 
served an average of 660 defendants per year over the last 
five years. 



Fee Change Details: 



1. 


Existing fee 


$500 


2. 


Proposed fee (sliding scale) 


$756 average 
(range of $ 10C 
- $1,000 on a 
sliding scale) 


3. 


Dollar and percentage increase between 1 and 2 


$51.2% for 
average fee 


4. 


Last time fee was changed 


1995 


5. 


Estimated annual costs to provide services (as 
calculated by the Controller's Office) 


$624,931 


6. 


Existing annual fee revenue (as certified by 
Controller's Office) 


$318,000 


7. 


Proposed annual fee revenue (as certified by the 
Controller's Office) 


$480,600 


8. 


Revenue shortfall (difference between line 5 and 
line 7) 


$144,331 


9. 


Percentage revenue recovery rate from proposed 
average fee (line 7 divided by line 5) 


76.9% 


10. 


Required average fee for 100 percent cost 
recovery 


$983 


11. 


CPI adjusted in the future? 


Not 
automatically 



BOARD OF SUPERVISORS 

BUDGET ANALYST 
41 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



Comments: 



1. The First Offender Prostitution Program is currently 
recovering approximately half of its costs through fees 
paid by participants. The District Attorney has 
recommended increasing the participant fee to a level 
that would allow a recovery rate of approximately 76.9 
percent, with the remainder absorbed by the District 
Attorney, the Police Department and Sage, the non-profit 
organization that conducts the classes. The District 
Attorney has recommended a sliding scale for this fee so 
that participants would pay one of the four following fees 
depending on their income, as follows: 



Fee 


% Cost 
Recovery 


Participant's 
Income Range 


$1,000 


100% 


$30,000+ 


$500 


50% 


$16,000-29,999 


$250 


25% 


$9,000-15,999 


$100 


10% 


$0 - 8,999 



2. If the new fees are adopted, the rate of cost recovery for 
the program will increase from approximately 50.9 
percent of total program costs of $624,931 to 
approximately 76.9 percent of these costs. Full recovery is 
not expected because approximately 40 percent of 
program participants will pay less than the full $1,000 fee 
under the proposed variable, or sliding scale, fee 
structure. The District Attorney's proposed fee schedule is 
based on participant ability to pay. Based on anonymous 
surveys of past participants, the District Attorney's Office 
estimates that approximately 60 percent of program 
participants will pay the full $1,000 fee. The rest will pay 
one of three lower fees based on their income. The fiscal 
impact of the variable fee structure will be approximately 
$144,331 less in collections than estimated total program 
costs. The District Attorney's estimate of participants and 
fees that will be charged under the proposed new fee 
structure are as follows: 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

42 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 





# Annual 






Fee 


Participants 


% Total 


Revenue 


$1,000 


382 


60.1% 


$382,000 


500 


159 


25.0% 


79,500 


250 


64 


10.1% 


16,000 


100 


31 


4.9% 


3,100 



636 100.0% $480,600 

3. The fee for this program will not be automatically 
adjusted in the future, according to staff of the District 
Attorney's Office. Mr. Tim Silard reports that the 
Administrative Code authorizes the District Attorney to 
examine the fee annually to ensure that it is sufficient to 
cover program costs but that annual adjustments based 
on changes in the cost of living will not be automatically 
imposed and such future increases would be subject to 
Board of Supervisors approval. 

4. Mr. Daley Dunham of the District Attorney's Office 
reports that the Police Department's estimated direct 
costs for this program of $185,621 out of total program 
costs of $624,931 were developed by District Attorney 
staff over a year ago by the District Attorney's office and 
do not include adjustments for any cost increases that 
may have occurred in the Police Department since the 
estimates were prepared. 

5. Full cost recovery for this program would require an 
average fee of approximately $983 rather than the 
proposed $756 average fee. To achieve this average, all 
fees on the sliding scale would have to be increased or 
additional higher fees would have to be added for certain 
income groups to raise the overall average. 

Recommendation: Since the FY 2002-2003 District Attorney's budget was 

balanced on the basis of the proposed fee and since future 
fee increases will be subject to Board of Supervisors 
approval, approve the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET^IuNALYST 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Item 8 - File 02-1130 



Department: 
Item: 

Purposes of Lease: 

Lessor: 

Lessee: 

Number of Sq. Ft.: 



Amount Payable 
to Airport: 



Airport Commission 

Resolution approving and authorizing the execution of a 
new Lease with the U.S. Customs Service for space in 
West Field Cargo Building I. 

The proposed lease provides for the U.S. Customs Service 
to occupy office and parking space in and near the 
Airport's West Field Cargo Building I, located in the West 
Field Area of the Airport on West Field Road. 

City and County of San Francisco, acting by and through 
its Airport Commission 

U.S. Customs Service 

Approximately 16,600 square feet, not including 
approximately 15,300 square feet for 100 parking spaces. 



5940,150 annually, or approximately $56.64 per square 
feet per year or $4.72 per square feet per month. The rent 
also includes 100 parking spaces, ten of which are located 
outside the facility and 90 of which are located across the 
street at the Westfield Parking Garage. As detailed in the 
attached memorandum (Attachment I), provided by Ms. 
Diane Artz of the Airport, the annual rent of $940,150 
would be comprised of four components: Base Rent, 
Parking, Services and Debt Service. As stated in 
Attachment I, the proposed lease provides for an annual 
rent increase in three of the four components, through the 
end of the lease, as follows: (1) Base Rent would increase 
annually based on Consumer Price Index adjustments, (2) 
Parking would increase annually based on the Airport's 
Rates and Charges schedule, and (3) Services would 
increase annually based on a review of operating and 
maintenance costs. The fourth component, Debt Service, 
would be a fixed cost based on a fifteen-year amortization 
of tenant improvement costs paid for by the Airport 
through the sale of Airport Revenue Bonds. 



Board of Supervisors 
Budget Analyst 

44 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



The chart below details the components of the $940,150 in 
annual rent paj r ments. 



Category 


Annual 
Rent Cost 


Cost Per 
Square Ft. 
Per Year 


Annual Increase Method 


Purpose 


Base Rent 


$327,850 


S19.75 


By CPI adjustments 


For core and shell space. 


Parking 


120,960 


7.29 


By Rates and Charges 
Schedule 


For 100 parking spaces. 


Services 


125,005 


7.53 


By budget revision 


For janitorial, utilities and 
maintenance services. 


Debt Service 


366,335 


22.07 


Not adjustable. $3.1 million 
in tenant improvements 
amortized at 5.56 percent 
interest over 15 years. 


For tenant improvements. 


Total 


S940,150 


S56.64 







Term of Lease: 



Services Including 
Maintenance and 
Operations: 



Tenant 
Improvements: 



Description: 



Of the $940,150 in annual rent costs, the U.S. Customs 
Service will pay $1.00 per year with the remaining 
balance of $940,149 to be paid by 40 carriers having U.S. 
Customs cargo transactions. The carriers would be 
charged by the Airport as explained in Attachment I. A 
list of the names of the carriers are shown in Attachment 
II, provided by Ms. Artz. 

Fifteen years with no option to renew, commencing upon 
completion of the tenant improvements estimated in 
January of 2003. 



To be paid by the Lessor but recovered through $125,005, 
or $7.53 per square foot per year in annual janitorial, 
utilities and maintenance charges included in the rent 
cost. 

To be paid by the Lessor but recovered through $366,335, 
or $22.07 per square foot per year in annual debt service 
charges included in the rent cost. 

The proposed resolution would authorize the Airport to 
execute a new fifteen year lease for approximately 16,600 
square feet of office space with the U.S. Customs Service 
at the West Field Cargo Building I. The Airport 
constructed the 140,000 square foot West Field Cargo 

Board of Supervisors 

Budget Analyst 

45 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



Building, which is comprised of approximately 57,000 
square feet of leasable office space, 15,000 square feet of 
public space and 68,000 square feet of leasable cargo 
warehouse space, at a total cost of $19,000,000, to be 
reimbursed to the Airport through the tenants' annual 
base rental payments to the Airport. According to Ms. 
Artz, construction of the West Field Cargo Building's first 
floor and the warehouse space was completed in 2001. 
Additional work on the second and third floors is 
estimated to be completed in July of 2002 as explained in 
Attachment III, provided by Ms. Artz. Ms. Artz reports 
that the subject 16,600 square feet of office space to be 
leased to the U.S. Customs Service would consist of 
approximately 3,400 square feet on the first floor, 11,000 
square feet on the second floor, and 2,200 square feet on 
the third floor of the West Field Cargo Building. The 
West Field Cargo Building replaces the former "Airborne 
Building" that was damaged in the Loma Prieta 
earthquake and was subsequently demolished in 1989. 
The West Field Cargo Building, therefore, is not part of 
the Airport's Master Plan Program and was primarily 
funded by Federal Emergency Management Agency 
(FEMA) monies. 

The U.S. Customs Service is responsible for the entry and 
clearance of all international cargo shipments entering 
the United States at the Airport. According to Ms. Artz, 
currently, the U.S. Customs Service rents office space at 
an off-Airport facility located on South San Francisco 
Boulevard because there had not been sufficient office 
space within the Airport to meet the needs of all agencies 
desiring space at the Airport prior to completion of the 
West Field Cargo Building's second and third floor. As 
stated in Attachment I, due to stricter Federal facilities 
requirements, an increase in cargo transactions and 
growth within the agency, the current off-Airport facility 
is no longer suitable to the needs of the U.S. Customs 
Service. 

Ms. Artz reports that current tenants of the West Field 
Cargo Building include China Airlines, Asiana Airlines, 
and the U.S. Department of Agriculture. China Airlines 
and Asiana Airlines took occupancy of their respective 
portions of the Cargo Building in April and May of 2001, 
respectively, occupying approximately 68,000 square feet, 

Board of Supervisors 

Budget Analyst 

46 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

or 100 percent of warehouse space in the West Field 
Cargo Building and 10,273 square feet, or about 18 
percent of the 57,000 square feet in total leaseable office 
space in the Cargo Building. According to Ms. Artz, the 
U.S. Department of Agriculture took occupancy of its 
respective portion of the Cargo Building in January of 
2002, occupying 6,600 square feet of office space, or 11.6 
percent of the 57,000 square feet in total leaseable office 
space. Including the proposed leased space of 16,600 
square feet to the U.S. Customs Service, the building will 
still have 23,527 square feet of vacant office space on the 
second and third floors, or a 41.3 percent vacancy factor. 
As stated in Attachment III, the Airport will continue its 
leasing efforts in order to bring the West Field Cargo 
Building to full occupancy. 

Comments: 1. Ms. Artz reports that under the proposed lease a 

deposit is waived for the U.S. Customs Service because 
the Federal Government prohibits the U.S. Customs 
Service from making deposits for leases. 

2. On April 2, 2002, the Airport Commission adopted 
Resolution No. 02-1130 recommending the award of a 
lease without undergoing a competitive bidding process, 
to the proposed lessee, the U.S. Customs Service. Section 
2A.173 of the City Administrative Code states "The 
Airport Commission shall have power to negotiate and 
execute leases of airport lands and space in airport 
buildings, without necessity for competitive bidding, to any 
person, firm, or corporation engaged in air transportation 
or a government agency ... provided, that the original term 
of any such lease shall not exceed 50 years, nor shall any 
extension of such lease exceed a period of 50 years." 

3. According to Ms. Artz, the lease with the U.S. Customs 
Service was recommended without soliciting competitive 
bids because the U.S. Customs Service is a critical 
government service, and the Airport has the authority to 
make such awards pursuant to the Administrative Code 
as cited in Comment No. 2 above. Ms. Artz advises that 
the U.S. Customs Service is an appropriate and 
compatible tenant for the West Field Cargo Building 
because the U.S. Customs Service processes cargo 
entering the United States on aircraft, and the proposed 

Board of Supervisors 

Budget Analyst 
47 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

lease would allow the agency to be in close proximity to 
the cargo facilities of the airlines. 

4. As reported in Attachment I, the fair market value for 
finished office space in the Airport market area ranges 
from $20.00 to $24.00 per square foot per year for a full 
service lease. The proposed lease rate of $56.64 per 
square foot per year is $32.64 higher than the up to 
$24.00 fair market value per square foot per year. Ms. 
Artz advises that the rental cost for the subject office 
space is up to $32.64 higher per square foot per year than 
the fair market value of up to $24.00 per square foot per 
year, largely as a result of the costs of tenant 
improvements included in the total $56.64 per square foot 
per year rental cost of the subject office space. According 
to Ms. Artz, the Airport will achieve the full recovery of 
the total $3,100,000 in tenant improvement costs over the 
15-year term of the proposed lease. Excluding the tenant 
improvements and parking costs, the proposed annual 
rent per square foot is $27.28, which is between 13.7 to 
36.4 percent higher than the $20.00 to $24.00 fair market 
value rate reported by Ms. Artz. As explained by Ms. Artz 
in Attachment I, the airlines have agreed to a higher than 
fair market rate. 

5. According to Ms. Artz, the tenant improvement costs, 
estimated to total approximately $3,100,000, capped at 
$3,500,000, will primarily consist of the buildout of core 
and shell space to a Level II Security facility, in 
accordance with Federal specifications. As stated in 
Attachment I, the SFO Technical Equipment Company, a 
consortium of international carriers, has undertaken the 
tenant improvements on behalf of the Airport, as 
authorized in a Letter of Agreement dated October 16, 
2001. The improvements are estimated to be completed 
in January of 2003, at which time the term of the lease 
with the U.S. Customs Service would commence according 
to Ms. Artz. The consortium will contract for 
architectural engineering, construction and project 
management services through a competitive bid process, 
subject to the Airport's approval, before December 31, 
2002. 

Recommendation: Approval of the proposed resolution is a policy matter for 

the Board of Supervisors. 

Board of Supervisors 

Budget Analyst 
48 



Page 1 of 4 



AIRPORT COMMISSION 

SAN FRANCISCO INTERNATIONAL AIRPORT 

CITY AND COUNTY OF SAN FRANCISCO 

MEMORANDUM 



TO: Harvey Rose, Budget Analyst Office DATE: June 27, 2002 

FROM: Diane Arte, Sr. Property Manager, SFO 

SUBJECT: Approval of a Lease with U.S. Customs Service 

This responds to your request of June 26, 2002, for information relating to the proposed Lease 
between the Airport and U.S. Customs Service ("Customs") for office space at West Field Cargo 
Building I (Board Item No. 02-1 130). 

Rational for the Proposed Lease 

In 1991, Customs Cargo Unit moved from a facility at San Francisco International Airport (the 
"Airport or SFO") to a larger, off-Airport facility located on North Access Road. The Cargo 
Unit is responsible for the entry and clearance of all international cargo shipments entering the 
United States at SFO. This facility is no longer suitable for Customs due to operational reasons. 
First, the U.S. Government categorizes Customs cargo facilities as Level JJ security facilities. 
The current facility does not meet today's rigorous federal requirements for proper security, 
storage, and segregation of goods. Second, over the past ten years, the volume of international 
cargo has increased dramatically, increasing from approximately 320,000 cargo transactions in 
1991 and peaking at 512,400 transactions in 1999. This represents an average growth of seven 
percent (7%) per year. In 2001, the volume of entries declined to 400,712, reflecting the events 
of September 1 1 th and the Bay Area economy in 2001. Long term however, all parties expect the 
cargo volumes to rebound and follow the historical pattern of 6-7% annual growth. 

With the growth of international cargo, there has been a corresponding increase in Customs 
staffing from 47 employees to 75 employees, which represents a sixty percent (60%) increase. 
Customs has outgrown its current facility and it is essential that it relocate to a facility that can 
support its operations. Cramped working conditions and antiquated facilities have impaired 
Customs' ability to meet the time-sensitive demands associated with cargo processing 
efficiencies and fully implement new security measures and technologies required to ensure 
state-of-the-art Customs processing of cargo. Customs has therefore expressed serious interest in 
relocating back onto the Airport. 

In early 2001, the Airport completed construction of a new cargo building in the West Field area, 
a building known as the West Field Cargo Building 1 ("WFCB"). It is comprised of 
approximately 72,000 square of leasable office space, public, and Airport support space 
(mechanical rooms, etc.), and 67,000 square feet of leasable cargo warehouse. Asiana Airlines 
and China Airlines are the anchor tenants at WFCB, occupying 100% of the warehouse and a 



49 



Memo to Harvey Rose Fage I ot k 

Aviation - Approval of a Lease with U.S. Customs Service 
June 27, 2002 



majority of the floor office space. The U. S. Department of Agriculture is also a tenant and the 
U. S. Food and Drug Administration recently committed to leasing a portion of the remaining 
available office space. 

WFCB is centrally located, providing air carriers, the U.S. Postal Service, customs brokers and 
other related entities easier access to this critical federal agency. WFCB offers suitable space 
that will meet the operational needs of Customs; therefore, relocation of Customs to WFCB 
creates broad benefits for Customs, the international carriers serving SFO, the Airport and the 
Bay Area economy. 

Annual Rent 

Rent for facilities housing Customs' Cargo Unit has traditionally been borne by the international 
carriers using the services of Customs upon invoice by the respective landlords. The Rent 
provision of the proposed Lease is consistent with this practice. The Initial Annual Rent is 
estimated at $940,150 per year; it will be adjusted, either up or down, upon completion of 
construction and determination of the final project cost and resultant annual debt service. 

Annual Rent payable by Customs is $ 1 per year. The balance will be payable monthly by 
the international carriers using the services of Customs, based on the individual carriers' 
actual pro-rata share of Customs transactions, as reported by Customs. On May 21, 2002, 
pursuant to Resolution No. 02-01 1 1, the Airport Commission approved the Airport's 
Rates and Charges schedule for FY 02/03, which incorporated a new fee category 
designated as the "Customs Rental Charge", which will be applied to the transaction data 
to determine the monthly rent for each international carrier. Rates and Charges is the 
Airport's methodology for establishing rental rates for terminal space, landing fees and 
other Airport services, based on a residual rate setting structure. All airlines are 
obligated, under their respective leases and/or permits, to pay all other charges or fees for 
facilities, as set forth on the applicable schedule of Rates and Charges. 

The Annual Rent is comprised of four revenue categories: 

Base Rent: $327,850 ($19.75/sf/year) for core and shell space. 

Parking: $120,960 ($7.29/sf/year) for 100 parking spaces to accommodate 

employee parking and government vehicles. 

Services: $125,005 ($7.53/sf/year) for provision of janitorial, utilities, and maintenance 

services. 

Debt Service: $366,335 ($22.07/sf/year) based on an estimated project cost of $3.1M, to be 
amortized over 15 years at 5.56% interest. The debt service represents the 
principal and interest attributable to the financing of up to $3.1 Million in 
project costs. The project will be financed utilizing general Airport revenue 
bonds issued by the Airport in March of 2002. The interest rate is based on 
the going rate of interest at the time of issuance. 

Cumulatively, the rate per square foot per year is $56.64. 



50 



Memo to Harvey Rose Page 3 of 

Aviation - Approval of a Lease with U.S. Customs Service 
June 27, 2002 



The rent is subject to annual increases based upon the following methodologies: 

Base Rent: By CPI adjustments. 

Parking: By Airport Rates and Charges . 

Services: By revision of the budget for Services, as determined by the Airport's 

Facilities, Operation and Maintenance Division. 

Debt Service: Not adjustable. 



Fair Market Value ("FMV") 

The annual rent per square foot is $56.65 per square foot per year or $4.72 per square foot per 
month. Market data indicates that current FMV for finished office space in the Airport market 
area ranges from $20 to $24 per square foot per year, full service. This is a dramatic decline 
from 3 rd quarter of 2001, where FMV ranged from $30 to $48 per square foot per year. Given 
recent trends, the proposed rate per square foot of $56.65 is significantly higher than FMV. The 
references regarding FMV are based on market data provided by BT Commercial Real Estate 
Market Research Division, Coldwell Banker, the Raiser Organization, and the City's Department 
of Real Estate. The rate is acceptable to the airlines for the following reasons: 

1 . The facility that currently houses Customs on South San Francisco Boulevard offers 
substandard office accommodations and fails to meet current security requirements. 
Early in 2001, Customs made it quite clear to the airlines that this location was no 
longer acceptable and, in light of the available space opportunity in West Field Cargo 
Building, they wanted to move back onto Airport property. Customs advised the 
airlines that failing this, they intended to move either to the Customs House in the San 
Francisco Financial District or to a new off- Airport office building. 

Close proximity to this vital government function is essential to airline efficiencies, 
economics and their cargo product offering. Logistically, the Customs House 
downtown was totally contrary to these airline goals. Alternatively, relocation to a 
different off- Airport building would have been further from the Airport, again posing 
a logistical and economic concern. Given Customs' clear desire to relocate from its 
present location and the alternatives posed, the airlines concluded that the West Field 
Cargo Building offered the best overall alternative in terms of logistics and 
economics. 

2. The airlines recognize that it is more expensive to have space on- Airport. By 
comparison, comparable office space in the Airport terminals is categorized as 
Category II space and rents for $128.86 per square foot per year. 



Methodology to Construct the Tenant Improvements 

Through our conversations with Customs, it became apparent that Customs would not be able to 
complete their own tenant improvements due to certain federal prohibitions regarding 
construction of tenant improvements and existing budget constraints. Given the broad benefits 

DA:amm 

bcc: Admin./Chron./Doc. File 5 1 

H:\My Documents\Airport_Memo.doc 



Memo to Harvey Rose Pa ge 4 of 4 

Aviation - Approval of a Lease with U.S. Customs Service 
June 27, 2002 



of bringing Customs back onto the Airport, the Airport agreed to fund the tenant improvements 
as a new capital project. The Capital Plan Review Committee incorporated the project into the 
Capital Plan, as approved by the Commission on June 5, 2001, for fiscal year 01/02 and 02/03. 
The San Francisco Airline Airport Affairs Committee approved the capital project in July of 
2001. 

SFO Technical Equipment Company ("SFOTEC"), is a consortium of the international carriers 
operating at the new International Terminal. Given that the member airlines of SFOTEC are the 
primary users of Customs' Cargo Unit, and SFOTEC's members will be paying the rent in 
accordance with Airport Rates and Charges, SFOTEC became involved with the initial 
programming for the Customs' build-out at WFCB. On October 16, 2001, pursuant to 
Resolution No. 01-0319, the Airport Commission authorized the Director to enter into a Letter 
Agreement with SFOTEC to undertake the design, construction and project management of the 
tenant improvements. SFOTEC will contract for the A/E services, construction services and 
project management services necessary for the completion of the project through a competitive 
process, all of which will be performed with Airport oversight. SFOTEC will be reimbursed for 
the actual, invoiced amounts for those third party contracts, pursuant to Airport review and 
approval. 



cc: Gary Franzella 



DA:amm 

bcc: Admin./Chron./Doc. File 5 2 

H:\My Documents\Airpon_Memo.doc 



rage i or i 



Carriers with U. S. Customs Cargo Unit Transactions 

Aeroflot-Russian Airlines 

Air Canada 

Air China 

Air France 

Alaska Airlines 

All Nippon Airways 

American Airlines 

Alitalia 

Asiana Airlines 

Atlas Air 

British Airways 

Cargolux Airlines International 

Cathay Pacific Airways 

China Airlines 

China Eastern Airlines 

Continental Airlines 

Delta Airlines 

El Al Israel Airlines 

EVA Airways 

Evergreen International 

Federal Express 

Finnair 

Gemini Air Cargo 

Japan Airlines 

Kitty Hawk Air Cargo 

KLM-Royal Dutch Airlines 

Korean Air 

Lufthansa German Airlines 

Martin Air Holland 

Mexicana Airlines 

Nippon Cargo Airlines 

Northwest Airlines 

Philippine Airlines 

Polar Air 

Singapore Airlines Cargo 

TACA 

United Airlines 

U.S. Airways 

Virgin Atlantic Airways 

U.S. Postal Service 

Note: This carrier list is subject to change as carriers commence or cease serving SFIA. 



53 



i£e 



West Field Cargo Building 1 



Overview of the Development 

Construction of West Field Cargo Building 1 began in April 1 999, with a 2 year 
construction schedule. In order to accommodate the two airline tenants' desire to take 
occupancy, and the Airport's desire to initiate rent, prior to final completion of the 
building, the Airport's Building Inspection and Code Enforcement Department ("BICE") 
issued a temporary certificate of occupancy ("TCO") for the first floor of the office wings 
and the warehouse portion of the facility. The Airport received the TCO and Asiana and 
China Airlines were permitted to move in and begin operations in May and June 2001, 
respectively. 

The TCO did not include the second and third floors of the facility, as additional work 
was required lo complete the base building elevator system and to construct common 
corridors on the upper floors, which corridors were not part of the base building contract. 
The Airport also determined that certain improvements were required on the 
telecommunication and data communication infrastructure to better support the tenants 
ITT needs on the upper floors. 

The common corridor project was completed in May of 2002 and the elevator work is 
scheduled for sign off by BICE within the next two weeks, at which time a TCO for the 
entire facility will be issued At that time, it is will be possible for tenants to occupy the 
upper floors, assuming completion of their tenant improvements. 

Leasing Efforts 

As construction of West Field Cargo Building proceeded, Aviation Management staff 
focused on the leasing efforts. The first priority was to consummate the leases with the 
two anchor airline tenants, China Airlines and Asiana Airlines. Prior to the leases, both 
of these airlines had off- Airport locations for cargo processing. Both leases were 
approved by the Airport Commission in June 2000, with Board approval following in 
July 2000. This achieved 100% lease up of the warehouse space and 18% of the leasable 
office space. 

The next lease, with the U.S. Department of Agriculture for 1 1 .6% of leasable space, 
was approved by the Airport Commission in November of 2001, with Board approval 
following in January 2002. Concurrent to this lease negotiation, Airport staff was 
developing the lease with the U.S. Customs Service, resulting in the proposed lease for 
another 29% of the space, leaving approximately 23,527 square feet unoccupied. 

Staff is currently working with the next prospective tenant, the U. S. Food and Drug 
Administration, for approximately 5,300 square feet of office space and is confident that 
additional tenants will be secured over the next year to bring the building to full 
occupancy. 



54 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Item 9- File 02-0811 



Department: 
Item: 



Program Services 
to bePerformed: 



Sheriffs Department 

Resolution approving the Controller's certification that 
Own Recognizance Release, Supervised Misdemeanant 
Services and Pretrial Court Diversion provided to 
arrested persons in the City and County of San Francisco 
can continue to be practically performed by a private 
contractor at a lower cost for the year commencing July 1, 
2002, than if the work were performed by City employees. 



Own Recognizance, Supervised Misdemeanant Services 
and Pretrial Court Diversion 



Description: 



Charter Section 10.104 provides that the City may 
contract with private firms for services which had been 
performed by City employees if the Controller certifies, 
and the Board of Supervisors concurs, that such services 
can in fact be performed by private firms at a lower cost 
than similar work services performed by City employees. 

The Controller has determined that contracting for these 
services for FY 2002-03 would result in estimated savings 
as follows: 

Own Recognizance Services 



Citv-Operated Service Costs 


Lowest 

Salary 

Step 


Highest 

Salary 

Step 


Salaries 
Fringe Benefits 
Total 


$788,787 

230.019 

$1,018,806 


$934,804 

252.389 

$1,187,193 


Estimated Total Contract 
Cost 


(862 .862) 


(863.038) 


Estimated Savmes 


$155,944 


$324,155 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

55 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



Supervised Misdemeanant Services 



Citv-Operated Service Costs 

Salaries 
Fringe Benefits 
Total 

Estimated Total Contract 
Cost 

Estimated Savings 



Lowest 

Salary 

Step 

$321,405 

112.096 

$433,501 



(360.465) 



$73.036 



Highest 

Salary 

Step 

$380,930 

123.144 

$504,074 



(361.396) 
£142.678 



Pretrial Court Diversion Services 




Citv-Operated Service Costs 


Lowest 

Salary 

Step 


Highest 

Salary 

Step 


Salaries 
Fringe Benefits 
Total 


$1,016,220 

297.371 

$1,313,591 


$1,203,954 

326.883 

$1,530,837 


Estimated Total Contract 
Cost 


(908.158) 


(910.759) 


Estimated Savings 


$405,433 


S620.078 



Comments: 



1. The Own Recognizance (O.R.) Project interviews 
persons arrested on non-warrant felony charges and 
certain misdemeanors who are booked into custody and 
are not immediately bailed or cited. The interviews 
provide information for the Superior Court to determine 
whether the person should be released on their own 
recognizance. 

The Supervised Misdemeanant Services releases persons 
accused of certain misdemeanor offenses who cannot post 
bail from the criminal justice system to the Supervised 
Misdemeanant Project. The Supervised Misdemeanant 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

56 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Project guarantees that the accused person will return to 
Supervised Court for a hearing. 

The Pretrial Court Diversion Services Project diverts 
selected misdemeanor offenders from the criminal justice 
system and places such offenders in the Pretrial Diversion 
Project to receive case management and referral to 
services such as vocational training, job placement, 
counseling, and substance abuse treatment. 

2. According to Ms. Jean Mariani of the Sheriffs 
Department, the O.R. Service was first certified as 
required under Proposition J, (Charter Section 10.104) in 
FY 1977-78 and has been continuously provided by an 
outside contractor since that time. 

Ms. Mariani advises that this would be the first year that 
Supervised Misdemeanant Services would be certified 
under Proposition J. Previously, Ms. Mariani notes that 
the City's Civil Service Commission approved personal 
service contracts for these services. However, Ms. Mariani 
advises that during FY 2001-02 the Civil Service 
Commission requested that the Supervised 
Misdemeanant Services be provided by the Sheriffs 
Department. Ms. Mariani reports that the Department 
decided to continue to provide such services under 
Proposition J because such services would be prohibitively 
expensive if City employees were used. 

Ms. Mariani further reports that Pretrial Diversion 
Project services was first certified as required under 
Proposition J in FY 1977-78 and has been continuously 
provided by an outside contractor since that time. 

3. The one-year contracts with the San Francisco 
Institute for Criminal Justice, the Center for Juvenile and 
Criminal Justice and the San Francisco Pre-Trial 
Diversion Project, the non-profit organizations which 
provide the O.R. Services, the Supervised Misdemeanant 
Services and the Pretrial Court Diversion Services, 
respectively each commenced on July 1, 2002. The 
proposed resolution, therefore, should be amended to 
provide for retroactivity. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

4. The Estimated Total Contract Cost used for the 
purpose of this analysis is (a) the San Francisco Institute 
for Criminal Justice's projected FY 2002-03 cost for Own 
Recognizance Project Services, (b) Center for Juvenile and 
Criminal Justice's projected FY 2002-03 cost for the 
Supervised Misdemeanant Services and (c) San Francisco 
Pretrial Diversion Program's projected FY 2002-03 cost 
for the Pretrial Court Diversion Services. 

5. The Controller's supplemental questionnaire with the 
Department's responses is attached to this report. 

Recommendations: 1. Amend the proposed resolution to provide for 

retroactivity, as noted in Comment No. 3. 

2. Approve the proposed resolution, as amended. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

58 



Page 1 of 3 
CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 

DEPARTMENT: 06/Sheriff 



CONTRACT SERVICES: Own Recognizance (OR) Services 
CONTRACT PERIOD: Julvl. 2002 -June 30, 2003 

(1) Who performed the activity/service prior to contracting out? 
Prior to contracting out, the service was not previously provided. 

(2) How many City employees were laid off as a result of contracting out? 
None 

(3) Explain the disposition of employees if they were not laid off. 
(Not applicable) 

(4) What percentage of City employees' time is spent on services to be contracted out? 
None 

(5) How long have the services been contracted out? Is this likely to be a one-time or an ongoing request 
for contracting out? 

Services have been provided via contract since 1966. It is likely that the Sheriff's Department 
will continue to contract them out. 

(6) What was the first fiscal year for a Proposition J certification? Has it been certified for each 
subsequent year? 

These services were first certified through Proposition J in Fiscal Year 1977-78. They have 
been certified each subsequent fiscal year. 

(7) How will the services meet the goals of your MBE/WBE Action Plan? 

Because a non-profit organization provides the services, the MBE/WBE Plan is not affected. 

(8) Does the proposed contractor provide health insurance for its employees? 
Yes 

(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same 
benefits provided to employees with domestic partners? If not, how does the proposed contractor 
comply with the Domestic Partners ordinance? 

The contractor offers the same benefits to employees with spouses as those with registered 
domestic partners in full compliance with the ordinance. 

(10) Does the proposed contractor pay meet the provisions of the Minimum Compensation Ordinance? 
Yes 

Department Representative: Jean M. Mariani, Chief Financial Officer 

Telephone Number: (415) 554-4316 



59 



CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 

DEPARTMENT: 06/Sheriff 

CONTRACT SERVICES: Supervised Misdemeanant Services 
CONTRACT PERIOD: July 1, 2002 -June 30. 2003 

(1) Who performed the activity/service prior to contracting out? 

Prior to contracting it out, the City did not provide this service. The contractor that was identified 
to perform this service for the Sheriffs Department had provided similar services to other City 
departments. 

(2) How many City employees were laid off as a result of contracting out? 
None 

(3) Explain the disposition of employees if they were not laid off. 
(Not applicable) 

(4) What percentage of City employees' time is spent on services to be contracted out? 
None 

(5) How long have the services been contracted out? Is this likely to be a one-time or an ongoing request 
for contracting out? 

Services have been provided via contract since 1988. It is likely that the Sheriffs Department 
will continue to contract them out. 

(6) What was the first fiscal year for a Proposition J certification? Has it been certified for each 
subsequent year? 

This is the first year for a Proposition J certification for this service. Prior to Fiscal Year 2002- 
03, the City's Civil Service Commission has approved personal service contracts for these 
services. 

(7) How will the services meet the goals of your MBE/WBE Action Plan? 

Because a non-profit organization provides the services, the MBE/WBE Plan is not affected. 

(8) Does the proposed contractor provide health insurance for its employees? 
Yes 

(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same 
benefits provided to employees with domestic partners? If not, how does the proposed contractor 
comply with the Domectic Partners ordinance? 

The contractor offers the same benefits to employees with spouses as those with registered 
domestic partners in full compliance with the ordinance. 

(10) Does the proposed contractor pay meet the provisions of the Minimum Compensation Ordinance? 
Yes 

Department Representative: Jean M Manani. Chief Financial Officer 

Telephone Number: (415) 554-4316 



60 



Page 3 of 3 
CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 

DEPARTMENT: 06/Sheriff 



CONTRACT SERVICES: Pretrial Court Diversion Services 



CONTRACT PERIOD: July 1. 2002 -June 30, 2003 

(1) Who performed the activity/service prior to contracting out? 

These services were initially funded through federal grant funds and service workers performed 
the duties. 

(2) How many City employees were laid off as a result of contracting out? 
None 

(3) Explain the disposition of employees if they were not laid off. 
(Not applicable) 

(4) What percentage of City employees' time is spent on services to be contracted out? 
None 

(5) How long have the services been contracted out? Is this likely to be a one-time or an ongoing request 
for contracting out? 

Services have been provided via contract since 1977. It is likely that the Sheriff's Department 
will continue to contract them out. 

(6) What was the first fiscal year for a Proposition J certification? Has it been certified for each 
subsequent year? 

These services were first certified through Proposition J in Fiscal Year 1977-78. They have 
been certified each subsequent fiscal year. 

(7) How will the services meet the goals of your MBE/WBE Action Plan? 

Because a non-profit organization provides the services, the MBE/WBE Plan is not affected. 

(8) Does the proposed contractor provide health insurance for its employees? 
Yes 

(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same 
benefits provided to employees with domestic partners? If not, how does the proposed contractor 
comply with the Domestic Partners ordinance? 

The contractor offers the same benefits to employees with spouses as those with registered 
domestic partners in full compliance with the ordinance. 

(10) Does the proposed contractor pay meet the provisions of the Minimum Compensation Ordinance? 
Yes 

Department Representative: Jean M. Mariani. Chief Financial Officer 

Telephone Number: (415) 554-4316 



61 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Item 10 - File 02-0991 



Department: 
Item: 



Services to be 
Performed: 

Description: 



Police Department 

Resolution concurring with the Controller's Certification 
that Crime Prevention Services can be practically 
performed by private contractor for lower cost than 
similar work services performed by City and County 
Employees. 



Crime Prevention Services for the Police Department 

Charter Section 10.104 provides that the City may 
contract with private firms for services which had been 
performed by City employees if the Controller certifies, 
and the Board of Supervisors concurs, that such services 
can in fact be performed by private firms at a lower cost 
than similar work services performed by City employee. 

The Controller has determined that contracting for the 
Police Department's crime prevention services for FY 
2002-03 would result in estimated savings as follows: 





Lowest 


Highest 




Salary 


Salary 


Citv-Operated Service Costs 


Sten 


Step 


Salaries 


$529,963 


$650,364 


Fringe Benefits 


128.021 


149.874 


Total 


$657,984 


$800,238 


Contractual Services Cost 


(570.853) 


(572.784) 


Estimated Savings 


$87,131 


$227,454 



Comments: 



1. Under the proposed contract for crime prevention 
services, San Francisco Safety Awareness For Everyone, 
Inc. (S.A.F.E.), would train citizens and businesses on 
how to minimize the likelihood of becoming victims of 
crime by (1) conducting neighborhood meetings to assist 
community members in analyzing crime prevention needs 
and implementing crime prevention strategies; (2) 
conducting safety presentations for children and their 

Board of Supervisors 

Budget Analyst 

62 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

parents, adults the elderly and tourists; (3) conducting 
business security and violence in the workplace 
presentations; (4) providing recommendations to residents 
and businesses on upgrading security; and, (5) 
coordinating crime prevention activities with other local, 
State and Federal law enforcement agencies. 

2. The Police Department has contracted with the 
proposed contractor, San Francisco S.A.F.E., Inc. to train 
citizens and businesses on how to minimize the likelihood 
of becoming victims of crime for 26 years. The proposed 
resolution, however, would be the first year that the 
Police Department has submitted the proposed contract 
under Proposition J. According to Captain John Goldberg 
of the Pohce Department, in previous years the Civil 
Service Commission has approved previous contracts. 
Captain Goldberg reports, however, that during the Civil 
Service Commission hearings in FY 2001-02, the 
Commission suggested that future approval would be 
more appropriate under Proposition J contracting 
procedures. 

2. The Estimated Total Contract Cost for the purposes of 
this analysis is based on the estimated costs for San 
Francisco S.A.F.E., Inc. to provide crime prevention 
services. 

3. The one-year contract with San Francisco S.A.F.E., Inc. 
commenced on July 1, 2002. Therefore, the proposed 
resolution should be amended to provide for retroactivity. 
According to Captain Goldberg, the Pohce Department 
was unable to have the proposed resolution heard in the 
Finance Committee before the Committee recessed in 
June. 

4. The Controller's supplemental questionnaire with the 
Department's responses is attached to this report. 

Recommendations: 1. Amend the proposed resolution to provide for 

retroactivity, as noted in Comment No. 3. 

2. Approve the proposed resolution, as amended. 



Board of Supervisors 
Budget Analyst 

63 



Page 1 of 1 
CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 

DEPARTMENT: San Francisco Police Department 

CONTRACT SERVICES: Crime Prevention Education 

CONTRACT PERIOD: July 1, 2002 to June 30, 2003 

(1 ) Who performed the activity/service prior to contracting out? 
One Sergeant and eight Police Officers. 

(2) How many City employees were laid off as a result of contracting out? 
None. 

(3) Explain the disposition of employees if they were not laid off. 
Reassigned, internal promotions, or retirement. 

(4) What percentage of City employees' time is spent of services to be contracted out? 
0%. 

(5) How long have the services been contracted out? Is this likely to be a one-time or an ongoing request for 
contracting out? 

Contract has been ongoing with the San Francisco Police Department for twenty-six years. 

(6) What was the first fiscal year for a Proposition J certification? Has it been certified for each subsequent 
year? 

We are requesting that 7/1/02-6/30/03 be the first year for Proposition J Certification. 

(7) How will the services meet the goals of your MBE/WBE Action Plan? 

S.A.F.E. is a non profit organization and does not qualify as a goal of the Department. 

(8) Does the proposed contractor provide health insurance for its employees? 
Yes. 

(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same benefits 
provided to employees with domestic partners? If not, how does the proposed contractor comply with the 
Domestic Partners ordinance? 

S.A.F.E. is in compliance with the Domestic Partners Ordinance. 

(10) Does the proposed contractor pay meet the provisions of the Minimum Compensation Ordinance? 
S.A.F.E. complies with the Living Wage Ordinance 

Department Representative: Captain John Goldberg 
Telephone Number: 553-1039 

64 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Item 11 -File 02-1136 



Department: 
Item: 



Services to be 
Performed: 



Department of Administrative Services (DAS) 

Resolution concurring with the Controller's certification 
that Convention Facilities management, operation and 
maintenance services can be practically performed at the 
Bill Graham Civic Auditorium and the Moscone Center by 
a private contractor for a lower cost than similar work 
services performed by City and County employees. 



Convention facilities management, operation and 
maintenance 



Description: 



Charter Section 10.104 provides that the City may 
contract with private firms for services which had been 
performed by City employees if the Controller certifies, 
and the Board of Supervisors concurs, that such services 
can in fact be performed by private firms at a lower cost 
than similar work services performed by City employees. 

The Controller has determined that contracting for 
convention facilities management, operations and 
maintenance services at the Bill Graham Civic 
Auditorium and Moscone Center for FY 2002-2003 would 
result in the estimated savings as follows: 



Citv Operated Service Costs 

Salaries 
Fringe Benefits 
Total 

Contractual Services Costs 

Estimated Savings 



Lowest 

Salary 

Step 


Highest 

Salary 

Step 


$9,344,185 

2.374.657 

11,718,842 


$10,962,307 

2.580,342 

13,542,649 


10.878.071 


10.878.071 


$840,771 


$2,664,578 



Comments: 



1. Under an outside contract, the Moscone Joint Venture, 
consisting of SMG and Thigpen Limited, Inc., manages, 
operates and maintains the Bill Graham Civic 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

65 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



Auditorium and Moscone Center. Specifically, the 
Moscone Joint Venture's responsibilities include: (1) 
contracting with others for their use of the convention 
facilities; (2) promoting the use of the convention 
facilities; (3) conducting event management activities; and 
(4) maintaining the convention facilities and the 
equipment therein. 

2. Convention facilities management, operation and 
maintenance services at the Bill Graham Civic 
Auditorium and Moscone Center were first certified as 
required by Charter Section 10.104 in FY 1982-1983 and 
have been contracted out continuously since then. 
According to Mr. John Noguchi of the Department of 
Administrative Services' Office of Convention Faculties 
Management, SMG, the private facility management 
company charged with operating the City's convention 
facilities, has been the contractor for these services since 
the Moscone Center opened in 1981. In 1993, SMG 
partnered with Thigpen Limited Inc., a minority business 
enterprise, creating the Moscone Joint Venture. 

3. Mr. Noguchi reports that the Department awarded a 
five-year contract for the provision of convention faculties 
management, operations and maintenance services at the 
Bill Graham Civic Auditorium and Moscone Center to 
Moscone Joint Venture, effective July 1, 1999. The 
proposed resolution would approve the Controller's 
certification for the fourth fiscal year of the five-year 
contract, from July 1, 2002 to June 30, 2003. The 
proposed resolution, therefore, should be made retroactive 
to July 1, 2002. 

4. The Contractual Services Cost used for the purpose of 
this analysis is the Moscone Joint Venture's projected FY 
2002-2003 costs to provide convention facilities 
management, operation and maintenance services. 

5. The Contractual Services Cost of $10,878,071 for FY 
2002-2003 is $949,310 or 8.0 percent less than the FY 
2001-2002 cost of $11,827,381. Attachment I to this report 
is a memorandum from Mr. Noguchi explaining the 
reasons for the decrease in the contractual services costs. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

66 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

6. The Controller's supplemental questionnaire with the 
Department's responses is included as Attachment II to 
this report. 

Recommendation: 1. Amend the proposed resolution to provide for 

retroactivity, as noted in Comment No. 3. 

2. Approve the proposed resolution, as amended. 



BOARD OF SUPERVISORS 

BUDGET: ANALYST 
67 



COtJA^N 




DEPARTMENT OF 

ADMINISTRATIVE SERVICES 



WTLLIE L. BROWN, JR. 
Mayor 

RYAN L. BROOKS 

DIRECTOR 



July 2, 200: 



Matt Stokes 

Office of the Budget Analyst 

Board of Supervisors 

City & County of San Francisco 

1390 Market Street, Room 1025 

San Francisco, CA 941.02 

Re: Convention Facilities Management 
Prop J 2002-2003 

Dear Matt, 

Per your request, following is a brief statement summarizing the decrease in the 
management contractor's labor costs at the Moscone Center and Bill Graham Civic 
Auditorium for fiscal year 2002-2003. 

In a Citywide effort to reduce the budget, Convention Facilities Management committed 
that beginning in fiscal year 2002-2003, costs associated with cleaning the exhibition 
floor would be transferred from the operator to the client. This service had historically 
been provided at no charge to the client. Service contractors, hired by the client to set up 
and dismantle shows, now have the added responsibility of cleaning the floor. This new 
arrangement accounts for the majority of the department's cost savings for fiscal year 
2002-2003. 

Please let me know if you have any questions or need further clarification. 

Sincerely, 





1 T. Noguchi 
)eputy Director 
Convention Facilities Management 
415-974-4027 



City Hall, Room 362, 1 Dr. Carlton B. Goodlstt Place, San Francisco, CA 94102-4683 

Telephone (415) 554-6171; Fax (415) 55*-6177 

68 

JUL-02-2002 15=09 415 974 4073 97* 



CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 

DEPARTMENT: Convention Facilities Management (Administrative Services) 

CONTRACT SERVICES: Operations 

CONTRACT PERIOD: July 1 , 2002 - June 30, 2003 

(1 ) Who performed the activity/service prior to contracting out? 
City 

(2) How many City employees were laid off as a result of contracting out? 
None 

(3) Explain the disposition of employees if they were not laid off. 
Employees went to work for the contractor. 

(4) What percentage of City employees' time is spent of services to be contracted out? 
0% 

(5) How long have the services been contracted out? Is this likely to be a one-time or an ongoing request for 
contracting out? 

21 Years 

(6) What was the first fiscal year for a Proposition J certification? Has it been certified for each subsequent 
year? 

1982-1983. Yes. 

(7) How will the services meet the goals of your MBEAVBE Action Plan? 
Contractor is a joint venture with a minority principal. 

(8) Does the proposed contractor provide health insurance for its employees? 
Yes 

(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same benefits 
provided to employees with domestic partners? If not, how does the proposed contractor comply with the 
Domestic Partners ordinance? 

Yes. 

(10) Does the proposed contractor pay meet the provisions of the Minimum Compensation Ordinance? 
Yes. 

Department Representative: John Noguchi 

Telephone Number: 974-4027 
69 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Item 12 -File 02-1127 

Recreation and Park 



Department: 



Item: 



Ordinance amending the San Francisco Park Code by 
adding Section 12.15, setting fees for participating in day 
camps run by the Recreation and Park Commission. 



Description: 



The proposed ordinance would increase annual revenues 
by an estimated $200,925, from $144,090 to $345,015, for 
fees charged for Recreation and Park Commission day 
camps. The Department demonstrated that the day 
camps were not covering the cost of service through fees, 
and that fees were lower than in surrounding 
jurisdictions. The proposed fee increases for the 
Department's day camps would be more comparable to 
other local day camps, by raising fees an average of 126.7 
percent. The specific proposed fee increases are shown in 
the Attachment provided by the Recreation and Park 
Commission. 



Fee Change Details: 




1. 


Existing average fee 


$37.50 per week 


2. 


Proposed average fee 


$85.00 per week 1 


3. 


Dollar and percentage increase between 1 and 2 


$47.50 (126.7%) 


4. 


Last time fee was changed 


1990 


5. 


Estimated annual costs to provide services (as 
calculated by the Controller's Office) 


$500,906 


6. 


Existing annual fee revenue (as certified by 
Controller's Office) 


$144,090 


7. 


Proposed annual fee revenue (as certified by the 
Controller's Office) 


$345,015 


8. 


Revenue shortfall (difference between 5 and 7) 


$155,891 


9. 


Percentage revenue recovery rate from proposed 
average fee (line 7 divided by line 5) 


68.9% 


10. 


Required average fee for 100 percent cost recovery 


$123.71 


11. 


CPI adjusted in the future? 


Yes 



Comments: 



1. As shown in the table above, the average fees for use of 
Recreation and Park Department's day camps would 
increase by an average of $47.50, or 126.7 percent, from 



1 The proposed ordinance shows a biweekly fee of $170.00 for the Pacific Art Camp and the Athletic 
Day Camp. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

70 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

$37.50 to $85.00 based on the average from the five City 
day camps. The proposed fee increase for City day camps 
are as follows: (a) a 142.9 percent increase at the Pine 
Lake Camp, from $35.00 to $85.00; (b) a 142.9 percent 
increase at the Silver Tree Camp, from $35.00 to $85.00; 
(c) a 142.9 percent increase at the Camp Gourmet, from 
$35.00 to $85.00; (d) a 161.5 percent increase at the 
Athletic Day Camp, from $32.50 to $85.00; (e) a 70.0 
percent increase at the Pacific Art Camp, from $50.00 to 
$85.00; and (f) 68.0 percent increase at the Pacific Art 
Camp (ages 4-6), from $25.00 to $42.00. 

2. According to Ms. Mary King-Gorwky of the Recreation 
and Park Commission, the Department has proposed 
increases in the subject fees in order to generate 
additional revenue for the Department. Even with the 
proposed increases, Ms. King-Gorwky advises that the 
Department would still not fully recover its costs for 
providing the subject services. Ms. King-Gorwky advises 
that the Department currently recovers 28.8 percent of its 
costs through existing fees. As noted in the above table, 
the Department would recover 68.9 percent of its costs 
under the proposed fee increases. 

3. The proposed fees would generate $345,015 of revenue, 
which is $200,925 or 139.4 percent more than the 
$144,090 of revenue that is currently generated. 

4. According to Ms. King-Gorwky, the Recreation and 
Park Commission conducted a survey of 725 day camp 
applicants regarding potential fee increases of camp fees. 
Ms. King-Gorwky further advises that the survey found 
that 446 respondents, or 61.5 percent, were willing to pay 
more for day camp services. 

5. The Recreation and Park Commission would annually 
submit the current day camp fee schedule to the 
Controller who shall apply the Consumer Price Index 
(CPI) to the fees charged by the Department. Therefore, 
the subject fees would be changed annually without 
receiving prior approval from the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

71 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Recommendation: Approval of the proposed ordinance is a policy matter for 

the Board of Supervisors due to future automatic CPI 
adjustment of the fee level without Board of Supervisors 
approval. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

72 



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73 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Item 13 - File 02-0987 



Departments: 



Item: 



Description: 



Airport Commission 

Administrative Services Department, Real Estate 
Division (RED) 

Resolution authorizing the rescission by the City and 
County of San Francisco of twenty-three (23) Grants of 
Easements (noise easement deeds) previously acquired by 
the City, for one property in the City of Pacifica and 
twenty-two (22) in the City of San Bruno. 

In 1992, the Airport entered into a Memorandum of 
Understanding (MOU) with the County of San Mateo and 
five cities (Daly City, Millbrae, Pacifica, San Bruno, and 
South San Francisco), in which the Airport provides funds 
to local governments to pay for the cost of insulating 
private residences. As part of the agreement to provide 
such funds to cover the noise insulation costs, the Airport 
obtains a Grant of Easement from the property owner, 
permitting the Airport to conduct operations, which would 
cause noise and vibration on the private property. In June 
of 2000, the Board of Supervisors approved a 
supplemental agreement (File 00-0606) which authorized 
the Airport to provide funds to pay for noise insulation 
costs for 1,764 private residences, schools, churches, and 
nursing facilities and to acquire 1,764 noise easements 
against Airport noise in Daly City, San Bruno, and 
unincorporated San Mateo County in addition to the noise 
easements authorized under the original MOU. The 
Airport has committed up to $154,200,000 to purchase the 
noise easements, of which approximately $120,900,000 
are Airport funds and approximately $33,300,000 are 
Federal Aviation Administration (FAA) funds 1 . 

Approval of the proposed resolution would permit 23 
property owners, which are identified in Attachment I, 
including one single-family residence in the City of 
Pacifica, one single-family residence in the City of San 



1 Under the original MOU between the Airport and the County of San Mateo and five San Mateo 
cities, the Airport committed up to $120,000,000 to provide funds to the County of San Mateo and 
five cities which signed the MOU. The Airport committed an additional 534,200,000 to purchase the 
1,764 additional noise easements in Daly City, San Bruno, and unincorporated San Mateo County, 
totaling $154,200,000. 

Board of Supervisors 
Budget Analyst 

74 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Bruno and 21 condominiums in the City of San Bruno, 
from whom the Airport had previously acquired noise 
easements, to withdraw from the Noise Insulation 
Program (i.e. "quitclaim" a previously authorized 
easement). The Noise Insulation Program contract 
permits property owners to withdraw from the program if 
they choose. As noted in Attachment II, provided by the 
Real Estate Division, property owners typically choose to 
withdraw from the Noise Insulation Program if (1) the 
owner plans to sell the uninsulated home and does not 
want to commit a potential buyer to the easement (See 
Comment No. 1); (2) some aspect of the planned 
insulation fails to meet a perceived expectation; or, (3) the 
owner does not want to pay for additional structural 
repairs that are not covered under the Program. 

Attachment I to this report lists the single-family 
residence in the City of Pacifica, the single-family 
residence in the City of San Bruno and the 21 
condominiums in the City of San Bruno who wish to 
withdraw from the Airport Noise Insulation Program. 

Comments: 1. According to Ms. Sally Osaki of the Airport, under the 

Airport Noise Insulation Program, the Airport advances 
25 percent of the cost of the installation of noise 
insulation when the relevant local government 
jurisdiction submits the easement to the Airport. The 
remaining 75 percent of the monies is paid by the Airport 
to the local government when the construction of the noise 
insulation commences. Although the Airport has 
advanced 25 percent of the costs for insulating the 23 
subject properties to the respective local governments, 
none of the 23 properties have been insulated to date. 

2. Ms. Osaki reports that the Airport has advanced $3,750 
to the City of Pacifica for the noise insulation costs and 
associated easement of the private residence at 170 
Sunshine Drive, which equals 25 percent of the total costs 
of $15,000. The property owner, however, now wishes to 
withdraw from the Airport Noise Insulation Program. Ms. 
Osaki notes that the $3,750 previously authorized by the 
Board of Supervisors and already paid by the Airport to 
the City of Pacifica to acquire this noise easement, will be 
deducted from future Airport payments due to the City of 

Board of Supervisors 
Budget Analyst 

75 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 



Pacrfica for the acquisition of other previously authorized 
noise easements. 

3. According to Ms. Osaki, the Airport has advanced 
$3,750 to the City of San Bruno for the noise insulation 
costs and associated easement for the private residence at 
508 3 rd Avenue, which equals 25 percent of the total costs 
of $15,000. The property owner now also wishes to 
withdraw from the Airport Noise Insulation Program. 
According to Ms. Osaki, $3,432, which represents 25 
percent of the cost of the noise insulation less 
administrative costs, will be deducted from future Airport 
payments due to the City of San Bruno for the acquisition 
of other previously authorized noise easements. Ms. Osaki 
states the Airport payments to the City of San Bruno 
include both noise insulation costs and administrative 
costs, pursuant to the supplemental agreement between 
the Airport and the County of San Mateo, Daly City and 
San Bruno discussed above (File 00-0606). 

4. According to Ms. Osaki, the Airport has advanced 
$25,214 to the City of San Bruno for the noise insulation 
costs and associated easement for the 21 condominiums, 
which equals 25 percent of the total costs of $100,858. The 
21 San Bruno condominium owners now wish to withdraw 
from the Airport Noise Insulation Program. Ms. Osaki 
states that the City of San Bruno will reallocate the 
$25,214 payment to 21 other San Bruno condominium 
owners that qualify for noise insulation under the MOU. 

5. Ms. Mara Rosales of the City Attorney's Office advises 
that the proposed quitclaim deeds, which would rescind 
the noise easements purchased by the Airport from the 23 
property owners, would create no new legal exposure for 
the Airport because the owners of the properties in 
question have voluntarily declined to participate in the 
publicly funded Airport Noise Insulation Program. 
According to Ms. Rosales, the Airport will still have 
complied with the State airport noise regulations by 
virtue of having offered noise insulation to these 23 
property owners. 



Board of Supervisors 
Budget Analyst 

76 



Memo to Finance Committee 

July 10, 2002 Finance Committee Meeting 

Recommendation: Approve the proposed resolution. 




cc: Supervisor Peskin 
Supervisor Daly 
President Ammiano 
Clerk of the Board 
Controller 
Ben Rosenfield 
Ted Lakey 



Board of Supervisors 
Budget Analyst 
77 



Quit Claim List (Updated 4/22/02) 
Fiscal Year 2001-2002 



Property 



Owner Last Name 



City 



1 170 Sunshine Drive 

2 508 3rd Avenue 

3 223 Boardwalk #C 

4 229 Boardwalk #H 

5 235 Boardwalk #D 

6 243 Boardwalk #F 

7 402 Boardwalk #1 1 

8 410 Boardwalk #11 

9 410 Boardwalk #24 

10 1126 Cherry Avenue #23 

11 1126 Cherry Avenue #68 

12 107 Piccadilly Place #C 

13 117 Piccadilly Place #H 

14 119 Piccadilly Place #A 

15 121 Piccadilly Place #H 

16 147 Piccadilly Place #G 

17 401 Piccadilly Place #16 

18 403 PiccadiliyPlace #5 

19 403 PiccadiliyPlace #22 

20 407 Piccadilly Place #6 

21 41 1 Piccadilly Place #8 

22 411 Piccadilly Place #14 

23 415 Piccadilly Place #6 



Petrucci 


Pacifica 


Soja 


San Bruno 


Kokezas 


San Bruno 


Becker 


San Bruno 


Fiske 


San Bruno 


Hewes 


San Bruno 


Flodin 


San Bruno 


Flodin 


San Bruno 


Kimes 


San Bruno 


Devere 


San Bruno 


Sullivan 


San Bruno 


Osip 


San Bruno 


Whited 


San Bruno 


Hoxell 


San Bruno 


Elliot 


San Bruno 


Donham 


San Bruno 


Sirios 


San Bruno 


Miller 


San Bruno 


Lee 


San Bruno 


Erasmy 


San Bruno 


Lamb 


San Bruno 


Unsworth & Hengst 


San Bruno 


Cochrane 


San Bruno 



ATTACHMENT A 



78 



City and County of San Francisco 




Real Estate Division 
Administrative Services Departmer 

Attachment II 
Pase 1 of 1 



MEMORANDUM 

July 3, 2002 



TO: 



Harvey Rose 
Budget Analyst 



THROUGH: Katie Fitzpatrick 
Budget Analyst 



FROM: 



Steve Legnitto 
Assistant Director 




Property 



SUBJECT: Resolution authorizing the rescission of 23 noise easements for properties located in 
Pacifica and San Bruno. 



We believe that the most common reasons for requesting withdrawal from the noise abatement and 
insulation program are as follows. 

1) The property owner wishes to sell the uninsulated home, without committing a potential 
buyer to granting rights to the Airport as stated in the easement deed. 

2) The property owner requests withdrawal from the program because some aspect of the 
planned insulation fails to meet his perceived expectations. 

3) The property owner does not wish to pay for structural repairs that are not covered under 
the MOU programs, i.e., dry rot damage that must be removed prior to the installation of 
acoustical windows and doors. 

Should you have any question, please call Jean Medlar at 554-9887. 



(^ ' 5) %WWIBhwW AN MATEO JUr acq 23 KS ™mo.dot 

FAX: (415) 552-921 S 



JUL-03-2002 13:59 



Office of the Director of Property 
25 Van Ness Avenue, Suite 400 



79 



41: 



152 5215 



SB'/. 



San Francisco, 941 

TOTAL P. 02 
P. 32 




1 Dr. Carlton B. Goodlert Place 
San Francisco, CA 94102-4689 



City and County of San Francisco Cif y Ha11 

Meeting Agenda 

finance Committee 

f 

Members: Supervisors Aaron Peskin and Chris Daly 
Clerk: Gail Johnson 



Wednesday, July 17, 2002 12:30 PM City Hall, Room 263 

Regular Meeting 



Note: Each item on the Consent or Regular agenda may include the following documents: 

1) Legislation 

2) Budget Analyst report 

3) Legislative Analyst report 

4) Department or Agency cover letter and/or report 

5) Public correspondence 

These items will be available for review at City Hall, Room 244, Reception Desk. 



Each member of the public will be allotted the same maximum number of minutes to speak as set by 
the Chair at the beginning of each item, excluding City representatives, except that public speakers 
using translation assistance will be allowed to testify for twice the amount of the public testimony 
time limit. If simultaneous translation services are used, speakers will be governed by the public 
testimony time limit applied to speakers not requesting translation assistance. 

DOCUMENTS DEPT. 
AGENDA CHANGES JUL , % m 

SAN FRANCISCO 

REGULAR AGENDA public library 



011178 [Motor Vehicle for Hire Permit Filing Fees and License Fees] 

Ordinance amending Sections 2.26.1 and 2.27. 1 of the Police Code to amend schedules for motor 
vehicle for hire permit filing fees and license fees. (Taxi Commission) 

8/2/01 . RECEIVED AND ASSIGNED to Finance Committee. 

5/1/02, CONTINUED. Speakers: None. 

Continued to 5/8/02. 

5/8/02. RECOMMENDED Heard in Committee. Speakers: Harvey Rose. Budget Analyst; Theodore Lakey. Deputy City 

Attorney; Naomi Little. Executive Director. Taxicab Commission 

5/8/02, REFERRED Transferred to Budget Committee. 

6/25/02, MEETING RECESSED Heard in Committee. Speakers: Bruce Oka; Jim Kennedy; Mark Newburg; Ann; Manuel; 

Joseph Fleischman; Howard Green; Paul Gillesppi; Jim Nakamora; Naomi Little, Taxicab Commission; Supervisor 

Ammiano; Supervisor McGoldrick; Supervisor Yee. 

Recessed to meeting of June 27, 2002 

6/27/02. AMENDED. AN AMENDMENT OF THE WHOLE BEARING SAME TITLE. Heard in Committee. Speakers: 

Naomi Little, Executive Director. Taxicab Commission; Rue Gravas. Charles: Jim Nakamora; John Bardis: Supervisor 

Ammiano. 

Amendment of the Whole further increasing fees. To Be transferred to Finance Committee to be heard on July 1 7, 2002 

6/27/02, CONTINUED TO CALL OF THE CHAIR AS AMENDED 

7/1/02. TRANSFERRED to Finance Committee. 



City and County of San Francisco 1 Printed at 12:24 PM on 7/11/02 



Finance Committee 



Meeting Agenda 



Wednesday, July 17, 2002 



020910 [Revenue Bond Election] 

Resolution calling and providing for a special election to be held in the City and County of San 
Francisco for the purpose of submitting to the qualified voters of said City and County on November 
5, 2002 a proposition for the issuance of revenue bonds and/or other forms of revenue financing by 
the Public Utilities Commission in a principal amount not to exceed $1,628,000,000 to finance the 
acquisition and construction of improvements to the City's water system and for the possible 
imposition of a surcharge on retail water customers; and consolidating said special election with the 
General Municipal Election to be held on November 5, 2002; complying with Section 53410 of the 
California Government Code; finding the proposed project is in conformity with the priority of 
Planning Code Section 101.1(b) and the City's General Plan. (Public Utilities Commission) 

(Fiscal impact.) 

6/5/02, RECEIVED AND ASSIGNED to Finance Committee. 

6/27/02, SUBSTITUTED Substituted by the City Attorney 6/28/02, bearing new title. 

6/27/02, ASSIGNED to Finance Committee. 

7/10/02. AMENDED. AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. Heard in Committee. Speakers: 

Margaret Bruce, Silicon Valley Manufacturing Group; Lee Glitch, President, San Francisco Chamber of Commerce; Brook 

Turner, Coalition for Better Housing; Ira Ruskin, Chair, Committee for Regional Water Reliability; 

Continued to 7/17/02. 

7/10/02, CONTINUED. 



021136 [Contracting out Convention Facilities management, operation and maintenance services] 

Resolution concurring with the Controller's certification that Convention Facilities management, 
operation and maintenance services can be practically performed at Bill Graham Civic Auditorium 
and the Moscone Center by private contractor for a lower cost than similar work services performed 
by City and County employees. (Administrative Services Department) 

6/21/02. RECEIVED AND ASSIGNED to Finance Committee. 
7/10/02, CONTINUED. Speakers: None. 
Continued to 7/17/02. 



021185 [Emergency Response Fee Amendments] 

Supervisors Daly, Ammiano, Gonzalez, McGoldrick, Sandoval, Leno 

Ordinance amending Section 755 of the San Francisco Business and Tax Regulations Code by 
increasing the Emergency Response Fee rates for standard telephone access lines from $1.00 to $1.25 
per month, for trunk lines from $7.50 to $9.38 per month, and for high capacity trunk lines from $135 
to $168.75 per month. 

7/1/02. ASSIGNED UNDER 30 DAY RULE to Finance Committee, expires on 7/31/2002. 
7/3/02, RECEIVED AND ASSIGNED to Finance Committee. 30 day rule waived. 
7/8/02, SUBSTITUTED. Supervisor Daly submitted a substitute ordinance bearing same title. 
7/8/02, ASSIGNED to Finance Committee. 



021049 [Lease of Property - Camelot Hotel] 
Supervisor Ammiano 

Resolution authorizing and approving the lease by and between the City and County of San Francisco, 
for the Department of Public Health, as Tenant, and 124 Turk Street, LP, as Landlord, for the Camelot 
Hotel located at 124 Turk Street, San Francisco, CA 94102. 

(Fiscal impact; District 6.) 

6/10/02, RECEIVED AND ASSIGNED to Finance Committee. 



City and County of San Francisco 



Printed at 12:24 PM on 7/11/02 



Finance Committee 



Meeting Agenda 



Wednesday, July 17, 2002 



021121 [Business Tax] 

Supervisor Peskin 

Motion submitting the San Francisco Tax Reform Ordinance 2002 to the qualified electors of the City 
and County of San Francisco, at the November 5, 2002 general municipal election. 

6/17/02, RECEIVED AND ASSIGNED to Rules and Audits Committee. 

6/19/02. TRANSFERRED to Finance Committee. (6/26/02 - Referred to Small Business Commission for comment and 

recommendation.) 



021097 [Business Tax] 

Supervisor Peskin 

Ordinance amending the Business and Tax Regulations Code to: (1) enact a new Article 12-A-l 
(Gross Receipts Tax Ordinance) to impose a gross receipts tax on persons engaging in specified 
business activities in San Francisco; (2) amend Article 12- A (Payroll Expense Tax Ordinance) to (i) 
reduce businesses' taxable payroll expense by the amount of payroll expense attributable to their San 
Francisco business activities taxed under Article 12-A-l (Gross Receipts Tax Ordinance), (ii) 
conform Article 12-A (Payroll Expense Tax Ordinance) with the enactment of Article 12-A-l (Gross 
Receipts Tax Ordinance) and amendments to Article 6 (Common Administrative Provisions), (iii) 
repeal the Enterprise Zone Tax Credit set forth in Section 906A, (iv) repeal the $500 surplus business 
tax revenue credit set forth in Section 906E, and (v) consolidate exemptions, definitions and other 
administrative provisions, as amended, that apply to Article 12-A (Payroll Expense Tax Ordinance) 
and other Articles of the Business and Tax Regulation Code, and place them in Article 6 (Common 
Administrative Provisions); (3) amend Article 12 (Business Registration Ordinance) to conform 
business registration requirements with the enactment of Article 12-A-l (Gross Receipts Tax 
Ordinance) and amendments to Article 12-A (Payroll Expense Tax Ordinance) and Article 6 
(Common Administrative Provisions); (4) amend Article 6 (Common Administrative Provisions) to (i) 
clarify common administrative provisions and conform them with the enactment of Article 12-A-l 
(Gross Receipts Tax Ordinance) and amendments to Article 12-A (Payroll Expense Tax Ordinance) 
and Article 12 (Business Registration Ordinance), (ii) consolidate exemptions, definitions and other 
administrative provisions that apply to Article 12-A (Payroll Expense Tax Ordinance), Article 12-A-l 
(Gross Receipts Tax Ordinance), Article 12 (Business Registration Ordinance) and other Articles of 
the Business and Tax Regulations Code, and (iii) eliminate the Board of Review; (5) amend Section 
501 of Article 7 to clarify the definition of "Permanent Residents" exempt from the tax on the 
transient occupancy of hotel rooms, and (6) amend Section 606 of Article 9 to repeal the exemptions 
to the tax and surcharge upon the rent charged for the occupancy of parking spaces in parking stations 
(i) which are part of residential or hotel premises and (ii) for registered hotel guests where the parking 
station is not located on the hotel premises. 

6/17/02, ASSIGNED UNDER 30 DAY RULE to Rules and Audits Committee, expires on 7/17/2002. 

6/19/02, TRANSFERRED to Finance Committee. (6/26/02 - Referred to Small Business Commission for comment and 

recommendation. ) 



ADJOURNMENT 



City and County of San Francisco 



Printed at 12:24 PM on 7/11/02 



Finance Committee Meeting Agenda Wednesday, July 17, 2002 

IMPORTANT INFORMATION 

NOTE: Persons unable to attend the meeting may submit to the City, by the time the proceeding 
begins, written comments regarding the agenda items above. These comments will be made a part of 
the official public record and shall be brought to the attention of the Board of Supervisors. Any 
written comments should be sent to Committee Clerk, Finance Committee, San Francisco Board of 
Supervisors, 1 Dr. Carlton B. Goodlett Place, Room 244, San Francisco, California 94102 by 5:00 
p.m. on the day prior to the hearing. Comments which cannot be delivered to the committee clerk by 
that time may be taken directly to the hearing at the location above. 



LEGISLATION UNDER THE 30-DAY RULE 



(Not to be considered at this meeting) 

Rule 5.42 provides that when an ordinance or resolution is introduced which would CREATE OR 
REVISE MAJOR CITY POLICY, the committee to which the legislation is assigned shall not consider 
the legislation until at least thirty days after the date of introduction. The provisions of this rule shall 
not apply to the routine operations of the departments of the City or when a legal time limit controls 
the hearing timing. In general, the rule shall not apply to hearings to consider subject matter when 
no legislation has been presented, nor shall the rule apply to resolutions which simply URGE action 
to be taken. 



021221 [Laws and procedures governing the enforcement of prevailing wages for workers on public 
work projects] 
Supervisor Ammiano 

Ordinance adding subsection 6.1(H), definition of prevailing wage; amending subsection 6.22(A)(6) 
to include a requirement concerning subcontractor licenses; amending subsection 6.22(B) to include a 
requirement that all contractor and subcontractors provide workers' compensation insurance 
certificates; amending subsection 6.22(E) concerning application and enforcement of prevailing wage 
requirements and assessment of penalties and backwages; amending subsection 6.22(0) to add further 
contractual requirements for the employment of apprentices and to add penalties for noncompliance; 
adding subsection 6.22(P) concerning safety requirements for contractors and subcontractors; 
amending section 6.24 to expand the authority of the Office of Labor Standards Enforcement to 
enforce requirements of state and federal law, to enforce working conditions and apprenticeship and 
to assess monetary penalties and backwages against public work contractors. 

7/8/02, ASSIGNED UNDER 30 DAY RULE to Finance Committee, expires on 8/7/2002. 



City and County of San Francisco 4 Printed at 12:25 PM on 7/11/02 



Fi nance Committee Meeting Agenda Wednesday, July 17, 2002 

Meeting Procedures 

The Board of Supervisors is the Legislative Body of the City and County of San Francisco. The Board has 

several standing Committees where ordinances and resolutions are the subject of hearings at which members of 

the public are urged to testify. The full Board does not hold a second public hearing on measures which have 

been heard in committee. 

Board procedures do not permit: 1) persons in the audience at a Committee meeting to vocally express support 

or opposition to statements by Supervisors or by other persons testifying; 2) ringing and use of cell phones, 

pagers, and similar sound-producing electronic devices; 3) signs to be brought into the meeting or displayed in 

the room; 4) standing in the meeting room. 

Citizens are encouraged to testify at Committee meetings and to write letters to the Clerk of a Committee or to 

its members, City Hall, 1 Dr. Carlton B. Goodlett Place, Room 244, San Francisco, CA 94102. 

Agenda are available on the internet at www.ci.sf.ca.us/bdsupvrs.bos.htm. 

THE AGENDA PACKET IS AVAILABLE FOR REVIEW AT CITY HALL, ROOM 244, RECEPTION DESK. 

Board meetings are televised on channel 26. For video tape copies and scheduling call (415) 557-4293. 

Requests for language translation at a meeting must be received no later than noon the Friday before the 

meeting. Contact Ohn Myint at (415) 554-7704. 

AVISO EN ESPANOL: La solicitud para un traductor en una reunion debe recibirse antes de mediodia de el 

viemes anterior a la reunion. Llame a Erasmo Vazquez (415) 554-4909. 

(415) 554-7701 



Disability Access 

Both the Committee Room (Room 263) and the Legislative Chamber are wheelchair accessible. The closest 

accessible BART Station is Civic Center, three blocks from City Hall. Accessible MUNI lines serving this 

location are: #47 Van Ness, and the #71 Haight/Noriega and the F Line to Market and Van Ness and the Metro 

stations at Van Ness and Market and at Civic Center. For more information about MUNI accessible services, 

call 923-6142. 

There is accessible parking in the vicinity of City Hall at Civic Center Plaza and adjacent to Davies Hall and the 

War Memorial Complex. 

The following services are available when requested by 4:00 p.m. of the Friday before the Board meeting: 

For American Sign Language interpreters, use of a reader during a meeting, or sound enhancement system, 
contact Ohn Myint at (415) 554-7704. 

For a large print copy of agenda or minutes in alternative formats, contact Annette Lonich at (415) 554-7706. 
The Clerk of the Board's Office TTY number for speech-hearing impaired is (415) 554-5227. 
In order to accommodate persons with severe allergies, environmental illness, multiple chemical sensitivity or 
related disabilities, attendees at public meetings are reminded that other attendees may be sensitive to various 
chemical based products. 



City and County of San Francisco 5 Printed at 12:2$ PM on 7/11/02 



Finance Committee Meeting Agenda Wednesday, July 17, 2002 

Know Your Rights Under the Sunshine Ordinance 

Government's duty is to serve the public, reaching its decisions in full view of the public. Commissions, boards, 
councils and other agencies of the City and County exist to conduct the people's business. The Sunshine 
Ordinance assures that deliberations are conducted before the people and that City operations are open to the 
people's review. For information on your rights under the Sunshine Ordinance (Chapter 67 of the San Francisco 
Administrative Code) or to report a violation of the ordinance, contact Donna Hall; by mail to Sunshine 
Ordinance Task Force, 1 Dr. Carlton B. Goodlett Place, Room 409, by phone at (415) 554-7724, by fax at (415) 
554-7854 or by email at Donna.Hall@sfgov.org 

Citizens may obtain a free copy of the Sunshine Ordinance by contacting Ms. Hall or by printing Chapter 67 of 
the San Francisco Administrative Code on the Internet, at http://www.sfgov.org/bdsupvrs/sunshine.htm 

Lobbyist Registration and Reporting Requirements 

Individuals and entities that influence or attempt to influence local legislative or administrative action may be 
required by the San Francisco Lobbyist Ordinance [SF Campaign & Governmental Conduct Code Sec. 2.100] to 
register and report lobbying activity. For more information about the Lobbyist Ordinance, please contact the 
San Francisco Ethics Commission at 30 Van Ness Avenue, Suite 3900, San Francisco, CA 94102; telephone 
(415) 581-2300; fax (415) 581-2317; web site www.sfgov.org/ethics 



City and County of San Francisco 6 Printed at 12:25 PM on 7/11/02 



FINANCE COMMITTEE 

S.F. BOARD OF SUPERVISORS 

CITY HALL, ROOM 244 

1 DR. CARLTON GOODLETT PLACE 

SAN FRANCISCO, CA 94102-4689 

IMPORTANT HEARING NOTICE!!! 



[Budget Analyst Report] 
Susan Horn 
25 ^0°^\ Main Library-Govt. Doc. Section 



i CITY AND COUNTY ^Wmmvf OF SAN FRANCISCO 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



July 11, 2002 

TO: Finance Committee DOCUMENTS DEPT. 

FROM: ^Budget Analyst JUL 1 6 2002 

SUBJECT: July 17, 2002 Finance Committee Meeting PUBLIC libr SC ° 

Item 1 File 01-1178 

Note: This proposed ordinance, which would increase Motor Vehicles for Hire fees, 
was last heard by the Finance Committee on May 8, 2002. The Finance 
Committee referred the proposed ordinance to the Budget Committee for 
consideration during the annual budget review during the month of June of 
2002. During the Budget Committee's consideration of the Taxicab 
Commission's proposed FY 2002-2003 budget, an amended version of the 
proposed fee ordinance was submitted to the Budget Committee. The 
amended ordinance changed the proposed fees and, overall, reduced projected 
FY 2002-2003 fee revenue by $117,300, from $1,445,250 to $1,327,950. Also 
at that time, the Taxicab Commission's proposed FY 2002-2003 expenditure 
budget was reduced by Budget Committee by $117,300 to conform to the 
amended schedule of fees and reduced revenue estimate. This proposed 
ordinance, as amended, was then transferred back to the Finance Committee 
for consideration. 

Department: Taxicab Commission 

Item Ordinance amending Sections 2.26.1 and 2.27.1 of the 

Police Code to amend the schedules for Motor Vehicles for 
Hire of the one-time permit application filing fees, other 
related fees and annual license fees and transferring 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

responsibility for the administration the Motor Vehicles 
for Hire Program from the Police Department's Taxicab 
Detail to the Taxicab Commission. 

Description: In November of 1998, San Francisco voters approved a 

Charter Amendment that created the Taxicab 
Commission (Proposition D) to administer the Motor 
Vehicles for Hire permits, fees and licensing program. 
Police Code Section 1076 (a) defines Motor Vehicles for 
Hire as every type, kind and class of privately owned 
motor-propelled passenger-carrying vehicles for hire over 
which the City may exercise jurisdiction, excluding 
vehicles licensed in other jurisdictions, limousines, 
funeral limousines, buses, private ambulances or rail 
vehicles. 

The proposed ordinance would (a) transfer responsibility 
for the administration the Motor Vehicles for Hire 
Program from the Police Department's Taxicab Detail to 
the Taxicab Commission in accordance with Charter 
Section 4.133; and (b) amend Sections 2.26.1 and 2.27.1 of 
the Police Code to modify the amount of the fees charged 
under the Motor Vehicles for Hire Program. The permit 
application filing fees are currently collected on a one- 
time basis only while other related fees are collected when 
applicable, for example each time a Medallion is lost, by 
the Police Department. The annual license fees are 
collected by the Treasurer/Tax Collector's Office. 

In accordance with Police Code Section 1087, all revenues 
generated from Motor Vehicles for Hire fees are deposited 
in the Taxicab Enforcement Fund and such funds can 
only be used for the capital and operating costs related to 
the Motor Vehicles for Hire permit and license program. 
Capital costs include vehicles used for auditing and 
enforcement purposes and operating costs include 
personnel expenses, materials and supplies and related 
costs. All expenditures made from the Taxicab 
Enforcement Fund are subject to appropriation approval 
by the Board of Supervisors. 

As stated above, during the Budget Committee's 
consideration of the Taxicab Commission's proposed FY 
2002-2003 budget, an amended version of the proposed 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
2 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



fee ordinance was submitted to the Budget Committee. 
The amended ordinance changed the proposed fees and, 
overall, reduced projected FY 2002-2003 fee revenue by 
$117,300, from $1,445,250 to $1,327,950. Also at that 
time, the Taxicab Commission's proposed FY 2002-2003 
expenditure budget of $1,445,250 was reduced by the 
Budget Committee by $117,300 to $1,327,950 to conform 
to the amended schedule of fees and reduced revenue 
estimate. Attachment I, provided by the Taxicab 
Commission, shows the current fees, previously proposed 
fees and currently proposed fees for 12 permit application 
filing fees and other related fees and eight annual license 
fees for Motor Vehicles for Hire. These fees were last 
revised in April of 1999 (File 98-1443). 

Attachment II, also provided by the Taxicab Commission, 
details the specific expenditure reductions to the Taxicab 
Commission's proposed FY 2002-2003 budget to reduce 
proposed expenditures by the $117,300 amount of the 
reduced revenues that would result from the amended 
version of the proposed ordinance. The Budget Committee 
approved the reductions to the Taxicab Commission's 
budget and recommended the reduced Taxicab 
Commission budget to the Board of Supervisors. 



Recommendations: Approve the proposed ordinance. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Attachment I 



Amended Proposed Taxi Fee Increase and Revenue Projections 
2002-2003 



6/27/02 







Original Prooosed Fee 2002-2003 


New Prooosed Fee 2002-2003 








Permit Tvpe 


Current Fee 
2002 


Original 

Proposed Fee 

2002-2003 


Original 
Proposed 

Fee vs. 
Current Fee 


% Increase 

Original 

Proposed Fee 

vs. Current 

Fee 


New 
Proposed 
Fee 2002- 

2003 


Original 

Proposed 

Fee vs. New 

Proposed 

Fee 


New 
Proposed 

Fee vs. 
Current Fee 


% Increase 

New 

Proposed 

vs. Current 

Fee 






en 

B 

> 

Q 


Driver 

Applications [ $65 


$65 


sol 0% 


$65 


$0 


so| 0% 






Driver 
Renewals 


$40 


$40 


SO | 0% 


S40 


so 


so 


0% 
























c 
■ 
a 


Permit 
Holder 
Applications 


$450 


$550 


$100 


22% 


$550 


so 


S100 


22% 






a 
o 

■ 

o 

<n 

a 

o 

X 

1 

IS 

a 


Permit 
Holder 
Renewals 


$330 


$625 


$295 


89% 


$495 


($130) 


$165 


50% 






















Ramped 
Taxicab 
Applications 


$325 


$100 


(5225) 


-69% 


$100 


$0 


(S225) 


-69% 






Ramped 
Taxicab 
Renewals 


$175 


$100 


(S75) 


-43% 


$100 


$0 


(575) 


-43% 


























C 
m 
<j 

Q. 

a. 
< 

■< 


PCN 

Applications 


$200 


$225 


$25 


13% 


$300 


v$75 


5100 


50% 






n 

ra 

= o 

S 2 

O 0) 

a 2 

o 

X 


Color 

Scheme 

Change 


$125 


$150 


$25 


20% 


S250 


$100 


$125 


100% 






Lost 

Medallions 


$150 


$150 


$0 


0% 


$150 


\ $0 


$0 


0% 






Metal 
Medallions 


$25 


$25 


$0 


0% 


$30 


. . $5 


$5 


20% 




























in 
a 

c 
ra 

a 


New Color Scheme Application 


















1 to 5 
Medallions 


$500 


$500 


so 


0% 


$750 


$250 


5250 


50% 






6 to 15 
Medallions 


$1,000 


$1,000 


$0 


0% 


$1,500 


$500 


S500 


50% 






16 to 49 
Medallions 


$2,000 


$2,000 


SO 


0% 


$3,000 


$1,000 


$1,000 


50% 






50 or more 

Medallions ! S2.500 


$2,500 


$0 


0% 


53,750 


$1,250 


$1,250 


50% 


















o 


Color Scheme Renewals 
















n 
ra 


1 to 5 

Medallions | S500 


5500 


SO 


0% 


S500 


50 


so 


0% 






6 to 15 
Medallions 


$1 ,000 


51,000 


I 

sol 0% 


$1,000 


$0 


SO 


0% 






16 to 49 
Medallions 


S2.000 


S2.000I SO 0% 


S2.000 


$0 


SO 


0% 






50 or more 
Medallions 


S2.500 


I 
S2.500I S0[ 0% 


! i ' 
S2.500| S0| S0| 0% 












i i 




ra 

a 

5 


Dispatch 

Service 

Application I S2.500 


S2.500I SO! 0%l 


i I 
S2.500I $0i SOI 0% 




Dispatch 

Service 

Renewals S2.500 


! ! ■ ! ! 

S2.50CI S0[ 0%| S2.500! SOI SOI 0% 






Total 





















51,040,17= S1, 445,250 



£1,327,950 (3117,300) S2S7.775 



Attachment II 



Reductions to Taxicab Commission Budget 
Per New Proposed Fee Increase 6/27/02 

• Per further discussions regarding the Taxicab Commission Fee Increases, I am submitting an 
amended fee schedule with the following amendments to the Taxicab Commission budget. 

Reductions in the total of $117,300 Include: 

• .75 FTE of class 1840, Junior Management Analyst in the amount of $41 ,085 

• .5 FTE of class 1842, Management Analyst in the amount of $31 ,106 

• $17, 776 in corresponding fringes 

• $1 ,333 in Professional and Contract Services 

• $26,000 in equipment for 1 car 



^Salaries/ 



^» : -^ -- %M?§S§il 



Class 



FTE 



Reductions 



1840 



-0.75 



(41,085) 



1842 



-0.5 



S (31.106) 



Subtotal 



(72,191) 



Fringe 



(17,776) 



i otal-Salary;& Fringe: 



-.-■?- 't-h^&^0 



£$3^(891967)1 



Non-Salary 



Professional and Contract 



(1 ,333) 



Capital/ Equiptment 



S (26.000) 



■^pfanNprfiSa laryj 



w^mmmmmm, i-.^ - s-aire,^) * 



STotar 
-Reductions/Savings"^ 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

Item 2 - File 02-0910 

Note: This item was continued by the Finance Committee at its meeting of July 10, 
2002. This revised report reflects the Amendment of the Whole approved by 
the Finance Committee at that meeting. 



Department: 



Public Utilities Commission (PUC) 
Mayor's Office of Public Finance 



Item: 



Resolution calling and providing for a special election to 
be held in the City and County of San Francisco for the 
purpose of submitting to the qualified voters of said City 
and County on November 5, 2002 a proposition for the 
issuance of revenue bonds and/or other forms of revenue 
financing by the Public Utilities Commission in a 
principal amount not to exceed $1,628,000,000 to finance 
the acquisition and construction of improvements to the 
City's water system and for the possible imposition of a 
surcharge on retail water customers; and consolidating 
said special election with the General Municipal Election 
to be held on November 5, 2002; finding the proposed 
project is in conformity with the priority of Planning Code 
Section 101.1(b) and the City's General Plan. 



Amount: 



The maximum principal amount is not to exceed $1,628 
billion. 



Source of Funds: 



Revenue bonds and/or other forms of revenue financing. 
Other forms of revenue financing include notes, 
debentures, commercial paper, variable rate demand 
notes and bonds, auction rate securities, lease revenue 
bonds, installment sale agreements, and other forms of 
similar financial products which may be created from 
time to time. 1 



1 According to Ms. Karol Ostberg of the PUC, the PUC will manage its debt portfolio to achieve an 
overall objective of minimizing costs and maintaining flexibility to respond to changing market 
conditions and a dynamic capital improvement program. The bulk of the debt is anticipated to be 
long-term fixed-rate revenue bonds which have the advantage of known financing costs over the 
useful life of the asset being financed. The PUC also anticipates using certain types of variable rate 
debt to take advantage of lower average interest rates. Use of such instruments would be 
particularly advantageous during construction of capital projects, by lowering the cost of capitalized 
interest. In addition, certain types of variable rate debt may be issued to permanently fund project 
costs. The added benefit of overall lower interest rates associated with variable rates is somewhat 
offset by the interest rate volatility associated with variable rate debt, so such debt would not exceed 
25 percent of the entire bond issuance, according to Ms. Ostberg. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
6 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



Description: The PUC has identified water system ($3,628 billion) and 

clean water system ($996 million) capital improvement 
costs totaling $4,624 billion, comprising: 

• $2,913 billion for regional water system 
improvements 2 . Regional customers would pay 
approximately 69 percent of the cost (approximately $2 
billion) and San Francisco ratepayers would pay 
approximately 31 percent of the cost (approximately 
$913 million). 

• $715 million for local water system projects within San 
Francisco 3 . This would be entirely funded by San 
Francisco ratepayers. 

• $996 million for Clean Water capital improvement 
projects within San Francisco 4 . This would be entirely 
funded by San Francisco ratepayers. As explained in 
Comment No. 15 below, separate bond issues would be 
required for these projects which are currently 
estimated to total $996 million. 

The $3,628 billion water system capital improvement 
program is intended to replace or repair aging water 
system facilities since many of the system's components 
are at the end of their useful life, address seismic 
concerns (particularly the lack of back-up facilities), 
accommodate future increases in the demand for water, 
and meet future regulatory requirements for the quality 
of drinking water. If this requested revenue bond 
authorization is approved by the voters in the November 
of 2002 election, the 13 year capital improvement 
program would start in 2003 and construction would be 
scheduled for completion by 2016. The PUC would review 
and update the plan annually during this 13 year 
program. 



2 Under the Amendment of the Whole, the regional water system comprises facilities for the storage, 
treatment, and transmission of water operated and maintained by the City in the Tuolumne, 
Stanislaus, San Joaquin, Alameda, Santa Clara, and San Mateo Counties, plus three reservoirs in 
San Francisco itself. The regional water system provides water to the City and the PUC's 29 
wholesale customers, who disperse the water to 1.6 million clients in Aiameda, San Mateo, and 
Santa Clara Counties. 

3 The local water system delivers water from the regional water system throughout the City and 
stores a portion of it locally in City reservoirs. 

* The clean water system collects, treats, and disposes City sewage and storm water. The City also 
contracts with public sector agencies in San Mateo County to provide wastewater services. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 
7 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



The water system capital improvement program consists 
of the 77 projects listed in Attachment V, provided by the 
PUC. These 77 projects comprise: 

(a) 37 regional water system capital improvement 
projects, including three reservoirs within City 
boundaries which are considered to be regional 
assets. These 37 projects would cost a total of $2,913 
billion of which regional customers would pay 
approximately $2 billion (approximately 69 percent) 
and San Francisco ratepayers would pay 
approximately $913 million (approximately 31 
percent), as itemized in Attachment V. This split in 
financing responsibility is discussed in Comment No. 
6. 

(b) 40 local water system capital improvement projects 
at a cost to San Francisco ratepayers of $715 million. 

The total cost to San Francisco ratepayers of these 77 
projects is $1,628 billion. The proposed revenue bonds in 
the amount of $1,628 billion would fund: 

• $937 million for the actual project construction costs 
(approximately 57.6 percent of the total $1,628 billion 
cost). 

• $210 million in escalation costs assuming 3 percent 
annual inflation during the 13 year construction 
period (approximately 12.9 percent of the total $1,628 
billion cost). 

• $185 million in program contingency costs and 
management reserves (approximately 11.4 percent of 
the total $1,628 billion cost). According to Ms. Karol 
Ostberg of the PUC, this amount includes a 10 
percent margin for program contingencies for the 
purpose of completing the program on budget and on 
schedule (10 percent of total construction and 
escalation costs is $115 million). The contingency will 
only be available for changes in scope and design that 
cannot be foreseen at the capital improvement 
program's outset. In addition, there is a 6 percent 
management reserve (6 percent of total construction 
and escalation costs is $69 million). Management 
reserves are required by large capital improvement 

BOARD OF SUPERVISORS 
BUDGET ANALYST 
8 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



programs in order to manage externally imposed 

conditions, critical emergencies, and other conditions 

that cannot be predicted in advance. 

$296 million for financing costs (approximately 18.2 

percent of the total $1,628 billion cost). This amount 

comprises: 



Financing Costs 



Costs of issuance 5 
Reserve fund deposit 6 



Cost 



316,280,000 
115.292.000 



Bond insurance premium" 
Capitalized interest fund 8 

Total: 



8,140,000 
156.288.000 

$296,000,000 



The breakdown of this $1,628 billion in costs between 
regional water projects and local water projects is shown 
in the following table: 





Construction 


Construction 
Inflation 


Contingency & 

Management 

Reserve 


Financing 
Costs 


Totals 


Regional Water 
Local Water 

TOTAL: 


$519,437,000 
417,854.000 

8937,291,000 


8123,899,000 
85,814.000 

$209,713,000 


$103,792,000 
81,296.000 

5185,088,000 


$166,026,000 
129,974.000 

3296,000,000 


$913,154,000 
714.938.000 

$1,628,092,000* 



* Note: Rounds to SI. 628 billion. 



All expenditures of bond proceeds for capital improvement 
program purposes, and all capital budgets, are subject to 



3 Costs of issuance include (a) rating agency fees (an estimated 56.512,000 or approximately 40 
percent of the total costs of issuance), (b) bond counsel fees (an estimated $5,698,000 or 
approximately 35 percent of the total costs of issuance), (c) financial advisory fees (an estimated 
$2,442,000 or approximately 15 percent of the total costs of issuance), and (d) printing and 
distribution of official statements, and other related fees (an estimated $1.62S,000 or approximately 
10 percent of the total costs of issuance). 

6 The debt service reserve fund is equal to maximum annual debt service. 

7 A bond insurance policy makes scheduled debt service payments if the issuer fails to do so. Bond 
insurance provides an issue an AAA rating and the resulting lower interest rates save more than the 
cost of the bond insurance premium, according to Ms. Ostberg. 

3 The capitalized interest fund is for bond proceeds which are reserved to pay interest on an issue for 
a period of time early m the term of the issue when capital improvement project construction is 
commencing. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 
9 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

appropriation approval by the Mayor and the Board of 
Supervisors. 

The proposed resolution to authorize a $1,628 billion 
revenue bond issue, although considerably smaller than 
the original $3,628 billion proposal, would remain the 
largest single voter authorization ever put before San 
Francisco voters. As noted above, the $1,628 billion in 
revenue bonds would finance the 77 water system capital 
improvement projects listed in Attachment V. 

Comments: Capital Improvement Program Planning 

1. In February of 1998, the PUC published a draft long- 
term Water Enterprise capital improvement plan which 
identified projects cumulatively costing an estimated $3.5 
billion and initiated development of a Program 
Management Consultant contract to assist with delivering 
such a large capital improvement program. In January of 
2000, two long-range financial reports by Bartle Wells 
Associates recommended that the PUC develop and adopt 
an integrated capital improvement program and long- 
range financial plan. In February of 2000, the State 
Auditor General recommended the completion of a long- 
range capital improvement program financial plan. In 
April of 2000, the PUC published a Water Supply Master 
Plan and a Facilities Reliability Plan which identified 
critical water system capital improvement projects, most 
of which were included in prior reports, but which failed 
to develop financing plans. On August 28, 2000, the 
Board of Supervisors authorized the first year of a four- 
year Program Management Consultant contract between 
the PUC and the San Francisco Water Alliance 9 , now 
renamed the Water Infrastructure Partners (see 
Comment No. 17). Since then, the PUC and the Program 
Management Consultant have worked to develop plans 
which (a) prioritized capital improvement projects in 
terms of their ability to improve reliability and reduce 
exposure to risk, (b) accurately estimated individual 
capital improvement projects' costs, (c) specified the 
project activities and staffing required to complete 



9 The San Francisco Water Alliance was a joint venture of Bechtel Infrastructure Corporation, The 
Jefferson Company, and Sverdrup Civil, Inc. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

10 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



individual capital improvement projects, and (d) included 
financing plans. 

2. The PUC hired a permanent General Manager in 
September of 2001 who focused on further development of 
the capital improvement program. In January of 2002, 
the General Manager presented the PUC with revised 
draft capital improvement plan documents. In response, 
the PUC requested public hearings to solicit feedback 
from local ratepayers and regional customers. Further 
revisions to the draft capital improvement program 
documents were made based on the input received at the 



public hearings, and on May 28, 2002, the PUC approved 
three key documents: 

• A Long-Term Strategic Plan for Capital Improvements 
which identifies strategic objectives and performance 
measurements to guide the capital improvement 
program. 

• A ten-year capital improvement program showing 
capital improvement program costs and schedules. 
Ms. Ostberg advises that all projects will begin 
construction within ten years, but that some may take 
up to an additional three years to close-out or 
complete, for a total of 13 years. 

• A Long-Range Financial Plan which recommends an 
optimal strategy for financing the capital improvement 
program. 

Evaluations of the Capital Improvement Program 

3. Following a recommendation from the Mayor's Public 
Utilities Infrastructure Task Force, the PUC's General 
Manager hired R.W. Beck, an independent engineering 
firm, to review the development and validity of the entire 
capital improvement program, the PUC's ability to 
successfully implement a capital improvement program of 
that size, and the long-range financial plan. Ms. Ostberg 
states that R.W. Beck was selected by the PUC General 
Manager on the basis of that firm's reputation, experience 
with similar projects, independence from the PUC (it has 
no other business with the PUC), and availability. 
Appendix 1 to this report presents a digest of R.W. Beck's 
conclusions and recommendations. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
11 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



4. In April and May of 2002, the R.W. Beck evaluation 
was reviewed by a Blue Ribbon Panel of professionals 
selected by the PUC's General Manager in consultation 
with the San Francisco Planning and Urban Research 
Association (SPUR) who had expertise in water delivery, 
infrastructure, planning, finance, and other disciplines. 
This panel made a number of recommendations which are 
also summarized in Appendix 1 to this report. 

5. Attachment I, provided by the PUC, states that the 
PUC agrees with all of the recommendations made by 



both R.W. Beck and the Blue Ribbon Panel, and states 
that it plans to implement those recommendations over 
the next two to three years. 

Concurrent Legislative Developments 

6. As outlined in Attachment I, provided by the PUC, the 
State Legislature is currently considering three bills 
which would impact the PUC's proposed capital 
improvement program. Of these three bills, SB1870 is 
supported by the PUC. SB1870 was originally proposed 
by the Bay Area Water Users Association to give 
wholesale customers more opportunity to be involved in 
financing regional water system capital improvement 
projects. SB1870 proposes to establish an independent 
entity, the San Francisco Bay Area Regional Water 
System Financing Authority, for the financing of regional 
water system projects. If enacted, the San Francisco Bay 
Area Regional Water System Financing Authority would 
assume responsibility for issuing revenue bonds in the 
amount of approximately $2 billion, or approximately 69 
percent of the $2,913 billion regional water system capital 
improvement program costs for which wholesale 
customers are responsible. This would leave the City 
responsible for issuing revenue bonds for the remaining 
approximately 31 percent, or approximately $913 million, 
of the regional water system capital improvement 
program for which the City is responsible. The amount of 
$913 million for the City's share of the regional water 
system capital improvement program plus $715 million 
for the local water system capital improvement program 
totals the $1,628 billion revenue bond issue and/or other 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
i 2 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 






forms of revenue financing which are now being proposed 
under this legislation. Attachment I, provided by the 
PUC, outlines the three State bills and their potential 
impacts on the PUC's capital improvement program. 

Capital Improvement Program Funding 

7. According to Ms. Ostberg, the general provisions of the 
sale of the Water Revenue Bonds would be as follows: 

• The timing of the issuance of the water revenue bonds 
each year would be determined by market conditions 
and capital improvement project spending rates. 
While the table below aligns projected bond issuance 
dates with projected capital improvement project 
expenditures, funding in certain years could initially 
take the form of commercial paper or other variable 
rate interest debt to be refunded by later bond issues, 
if financially advantageous to the City. 

• At any given time, the PUC might have financing in 
place such as commercial paper to serve as interim 
financing during the capital improvement project 
construction phases, as well as 30 year term fixed or 
variable rate bonds to provide permanent financing 
once construction is completed. 

« The PUC expects to actively seek and take advantage 
of other financing sources as they become available, 
including State or Federal grants, extraordinary 
revenues (for example, one-time revenues from surplus 
land sales), and State revolving funds. Such 

alternative sources, if available, would reduce the 
amount of bonds which would need to be issued and 
would lower the overall capital improvement program 
costs. 

» Each type of financing would require the prior 
approval of the Mayor and the Board of Supervisors. 

• The water revenue bonds would be issued at an 
interest rate not to exceed 12 percent, or whatever 
future cap (if any) is set by State law. 

8. Attachment II, provided by the PUC, shows the 
projected debt service schedule for proposed revenue 
bonds in the amount of $1,628 billion to be issued during 
the period of FY 2003-2004 through FY* 2031-2032. Ms. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 
13 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



Ostberg states that the average annual debt service 
payment will be S85 million for each of the 30 years from 
FY 2003-2004, and the total debt service payment over 30 
years will be $2,551 billion. 

9. Attachment III, provided by the PUC, shows that San 
Francisco ratepayers currently pay the second lowest 
average water rates in the Bay Area. In FY 2002-2003, 
San Francisco ratepayers pay an average monthly water 
bill of $14.43, compared to an average monthly water bill 
of $17.51 across the 12 Bay Area jurisdictions. However, 
as shown in the table below, San Francisco ratepayers' 
share of water system projects would be paid for by 
projected gradual increases in water rates from an 
average monthly bill of $17.16 in FY 2003-2004 to an 
average monthly bill of $47.07 in FY 2015-2016, a $29.91 
per month or approximately a 174.3 percent increase 
using 2003 dollars. Ms. Ostberg advises that the water 
rates of other utilities will also increase during this period 
as a result of their own capital improvement programs or 
because they are wholesale customers of the PUC. 

Even though the proposed resolution reduces the revenue 
bond amount by $2 billion, from $3,628 billion to $1,628 
billion, the water service rate increase for San Francisco 
ratepayers would remain 174.3 percent. This is because 
San Francisco ratepayers' share of the water system 
capital improvement program remains $1,628 billion 
under either proposal, comprising $913 million for the 
City's share of regional water system capital improvement 
projects and $715 million for local water system capital 
improvement projects. The remaining $2 billion of 
regional water system projects would be funded by 
x'egional water customers. 

According to Mr. Bill Berry of the PUC, concerns have 
been expressed by representatives of residential landlords 
and tenants over whether or not the proposed resolution 
should permit residential landlords to recover water rate 
increases from tenants in units covered by the provisions 
of Chapter 37 of the San Francisco Administrative Code 
(the Residential Rent Stabilization and Arbitration 
Ordinance). As of the writing of this report, no decision 



BOARD OF SUPERVISORS 

BUDGET ANALYST 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



has been made whether or not to include a pass-through 
provision in the proposed resolution. 

10. The following tables present (a) the PUC's projected 
sale of revenue bonds or other instruments in the amount 
of $1,628 billion, and (b) the impacts on residential rates 
for San Francisco households during the period of FY 
2003-2004 through FY 2015-2016. 



Projected Bond Issuance Schedule 



Fiscal Year 


2003-04 


2004-05 


2005-06 


2006-07 


2007-08 


2008-09 


2009-10 


Amount of 
Financing Issued 

Regional Water 
Local Water 
Annual Total 


(S million) 

$7 

10 

$17 


(S million) 

$17 

20 

$37 


(S million) 

$24 

53 

$77 


(S million) 

$67 

67 

$134 


(S million) 

$105 

77 

$182 


(S million) 

$132 
154 

$286 


(S million) 

$130 
133 

$263 


Fiscal Year 


2010-11 


2011-12 


2012-13 


2013-14 


2014-15 


2015-16 


Totals 


Amount of 
Financing Issued 

Regional Water 
Local Water 
Annual Total 


($ million) 

$165 

77 
$242 


(S million) 

$79 

31 

$110 


(S million) 

$66 

56 

$122 


(S million) 

$56 

37 

$93 


(S million) 

$44 



$44 


(S million) 

$21 



$21 


(S million) 

$913 
715 

$1,628 



Anticipated Impact on Residential Customers 



Fiscal Year 


2003-04 


2004-05 


2005-06 


2006-07 


2007-08 


2008-09 


2009-10 


Average monthly 
cost to SF 
households 


$17.16 


$20.42 


$22.46 


$24.71 


$26.93 


$29.35 


$32.00 


Fiscal Year 


2010-11 


2011-12 


2012-13 


2013-14 


2014-15 


2015-16 




Average monthly 
cost to SF 
households 


$34.88 


S38.01 


S41.06 


S43.ll 


$45.26 


S47.07 





BOARD OF SUPERVISORS 
BUDGET ANALYST 

15 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



11. For San Francisco businesses, the proposed revenue 
bonds would result in annual water rate increases of 
between 4.8 and 5.8 percent depending on the industry, 
according to Ms. Ostberg. The Budget Analyst projects 
that Sar Francisco businesses would therefore pay a total 
compounded water service rate increase of between 102 
and 133 percent by FY 2015-2016. 

12. The Amendment of the Whole proposes that the 
maximum principal amount of $1,628 billion could be 
reduced if the Board of Supervisors determines that San 
Francisco ratepayers would benefit from having the 
proposed San Francisco Bay Area Regional Water System 
Financing Authority finance, in whole or in part, the 
City's portion of the regional water capital improvement 
program. According to Ms. Theresa Alvarez of the City 
Attorney's Office, if the San Francisco Bay Area Regional 
Water System Financing Authority finances such projects, 
the City would need to take one of two actions in order to 
be a voting member of the San Francisco Bay Area 
Regional Water System Financing Authority, as required 
by SB1870. The City would either have to seek voter 
approval to (a) repeal Proposition H, or (b) impose a 
surcharge on retail water rates so that San Francisco 
ratepayers pay their share of the debt service on the 
bonds issued by the San Francisco Bay Area Regional 
Water System Financing Authority, and its operating 
expenses, given Proposition H constraints on water 
service rate increases. Ms. Alvarez states that if the 
proposed resolution is not approved by the voters, then 
the same powers could be obtained through the proposed 
Charter Amendment described in Comment No. 22 below. 
The size of the surcharge would be dependent upon the 
amount of debt incurred by the San Francisco Bay Area 
Regional Water System Financing Authority and the 
interest rates applying at the time the debt is incurred. 

13. Ms. Ostberg states that during the public hearings 
on the PUC's proposed capital improvement program, the 
PUC received considerable public comment from all 
customer classes on the impact of the proposed bond 
measure on those least able to pay higher rates. 
Therefore, the PUC intends to initiate a rate study to (a) 
review the PUC's rate structure, (b) ensure that rates are 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

16 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



fairly distributed among customer classes, and (c) 
incorporate a means to support conservation and recycling 
initiatives. The rate study results are expected in early 
2003, after the November of 2002 election but prior to the 
first issuance of the proposed bonds and the resulting rate 
increase. Ms. Ostberg advises that this rate study cannot 
be completed earlier because its largest component, a 
demand study, requires examination of the peak demand 
period of September through October of 2002. Ms. 
Ostberg advises that a rate study has not already been 
completed because (a) the PUC lacked a permanent 
General Manager, and (b) one of the key lessons learned 



from the public hearings was the public's desire to better 
understand the PUC rates structure. 

14. Appendix 2 to this report provides additional 
information on the PUC's Water Enterprise credit ratings, 
other financing options if voters do not approve the 
proposed revenue bonds, and Charter Section 9.107 
exceptions. 

15. As noted above, the proposed resolution does not 
cover the current estimate of $996 million needed to fund 
the ten projects designed to replace or repair aging clean 
water facilities. According to Ms. Ostberg, the public 
outreach hearings on the capital improvement plan held 
by the PUC in the Spring of 2002 identified a lack of 
community support for the Clean Water capital 
improvement projects selected by the PUC and raised a 
number of environmental issues. Therefore, the PUC 
General Manager is recommending that the PUC prepare 
a separate, comprehensive sewer service master plan over 
the next 18 to 24 months. Ms. Ostberg states that the 
PUC anticipates bringing a Clean Water Revenue Bond 
proposal to the Board of Supervisors during calendar year 
2004. 

Program Management Consultant 

16. On August 28, 2000, the Board of Supervisors 
approved a four-year contract between the PUC and the 



BOARD OF SUPERVISORS 
BUDGET ANALYST 
17 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



San Francisco Water Alliance 10 for program management 
services related to the capital improvement program 
(Board Resolution 754-00), subject to annual Board of 
Supervisors approval to renew the contract. 

17. On March 28, 2002, Bechtel Infrastructure 
Corporation withdrew from Contract Year 2 of the 
Program Management Consultant contract, thus 
terminating its contractual relationship with the City. 
The remaining joint venture partners, now consisting of 
Primus Industries, Inc. 11 and Jacobs Civil, Inc. 12 and 
renamed the Water Infrastructure Partners, requested 
that the PUC reassign the program management services 
contract to their reconstituted joint venture, with Jacobs 
Civil, Inc. as the lead partner responsible for meeting the 
contract requirements, the role formerly performed by 
Bechtel Infrastructure Corporation 13 . PUC staff 

determined that the reconstituted joint venture met or 
exceeded each of the original Request for Proposals' 
requirements and was therefore qualified and competent 
to assume responsibility for completing the contract term. 
The PUC accepted the proposed reassignment of the 
contract to the reconstituted joint venture, subject to 
Board of Supervisors approval to (a) reassign the contract, 
(b) waive the competitive procurement requirements of 
Administrative Code Sections 6.40 et seq., and (c) release 
the remaining contract funds for Contract Year 2 which 



10 The San Francisco Water Alliance consisted of Bechtel Infrastructure Corporation, Sverdrup 
Civil, Inc., and The Jefferson Company. 

11 On October 1, 2000, The Jefferson Company changed its name to Primus Industries, Inc. Mr. 
Jefferson states that he is the sole owner of Primus Industries, Inc. According to Ms. Lillie Sunday 
of Primus Industries, Inc., on October 1, 2000 The Jefferson Company changed its name to Primus 
Industries, Inc. "to provide the necessary infrastructure required to support our rapid growth in size, 
services, and capabilities. We operate as Primus Industries, Inc. with two subsidiary companies: 
Primus Transportation Company, and Primus Infrastructure Company." Mr. Jeet Bajwa of the PUC 
states that when The Jefferson Company's name change to Primus Industries, Inc. took place on 
October 1, 2000, the Human Rights Commission was advised immediately and Human Rights 
Commission certification was issued on March 12, 2001. However, for the purposes of the former 
San Francisco Water Alliance contract, The Jefferson Company name was left unchanged. 

12 On March 1, 2002, Sverdrup Civil, Inc. was purchased by Jacobs Civil, Inc. and ceased to exist as 
a separate entity. 

13 In a March 28, 2002 letter to the PUC's General Manager. Mr. James Jefferson, President and 
CEO of Primus Industries, Inc. and Ms. Darlene Gee. Vice-President of Jacobs Civil, Inc. state: "We 
propose to rename our joint venture, if desirable, to allow a clean break from the association with 
past perceptions. We would restructure the joint venture and designate Jacobs Engineering as the 
lead. Everything else would remain unchanged." 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
18 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



expires on September 21, 2002. Board of Supervisors 
approval was granted on June 17, 2002 (File 02-0905). 
According to Mr. Jeet Bajwa of the PUC, it is the PUC's 
intention to request that the Board of Supervisors 
approve Contract Year 3 continuation of the contract with 
the renamed Water Infrastructure Partners (September 
22, 2002 through September 21, 2003). 

18. The Controller has performed three audits of the 
Program Management Consultant's performance against 
its task orders, short-term performance measures, and 
long-term performance measures (July 20, 2001, October 



2, 2001, and April 8, 2002). In August and September of 
2001, an independent Peer Review Panel reviewed the 
work of the Program Management Consultant 14 . In May 
of 2002, the PUC completed a new performance 
evaluation of the Program Management Consultant which 
concluded that during the first half of Contract Year 2 the 
Program Management Consultant performed as follows. 
On a scale of 1 (did not deliver as agreed), 2 (partial 
fulfillment), and 3 (delivered as agreed), the Program 
Management Consultant scored 3 for "adherence to 
project schedule" and "task management", 2.61 for 
"adherence to project schedule," and 2.58 for "quality of 
work" in relation to 12 tasks. Therefore, the PUC 
evaluated the Program Management Consultant as fully 
meeting half of its key performance measures. 

19. The Budget Analyst notes that while the PUC 
intended to fully integrate PUC and Program 
Management Consultant staff during the first two 
eontract years, such integration has not taken place. The 
Budget Analyst also notes that the ability of the Program 
Management Consultant to achieve significant, 
documented, and verifiable capital improvement program 
management savings remains unproven. 



le independent Peer Review Panel, convened to meet the Board of Supervisors requirement for 
an independent peer review of Contract Year 1 of the San Francisco Water Alliance contract, 
comprised Mr. Paul Findley and Mr. Peter Talbot of Malcolm Pirnie. Inc. (a private company of 
environmental engineers, scientists, and planners) and Dr. Douglas Selby, Deputy City Manager of 
the City of Las Vegas. A key recommendation of that peer review was that performance measures 
should be established within each task order issued to the Program Management Consultant bv the 
PUC. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
19 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

Workforce Issues 



20. Since the Budget Analyst's first report on the 
Program Management Consultant contract issued in 
August of 2000, the Budget Analyst has noted the PUC's 
historic inability to fill vacant engineering positions in the 
PUC's Utilities Engineering Bureau. According to Ms. 
Therese Madden of the PUC, as of July 3, 2002 the 
Utilities Engineering Bureau has 60 vacancies out of 197 
positions in total (approximately 30.5 percent). Of these 
60 vacancies, 40 are in engineering classes, out of 119 
engineering positions in total (approximately 33.6 



percent), and ten are in technical classes. Ms. Madden 
states that the PUC has initiated the hiring process for 11 
of the 40 vacant engineering positions. Ms. Madden 
advises that the majority of the remaining 49 vacant 
engineering positions are in classifications which now 
have eligible lists, and therefore hiring appointments 
could be made immediately. However, the hiring process 
has not been initiated for those 49 vacant positions 
because such positions are to work on capital 
improvement projects funded by the proposed revenue 
bonds which have yet to be approved by the voters. Ms. 
Madden states that the Utilities Engineering Bureau does 
plan to initiate the selection processes for these 49 vacant 
positions in the Fall of 2002, in advance of the voters' 
approval of the proposed revenue bonds, so that potential 
candidates can be hired and begin work as soon as the 
revenue bonds are approved. 

21. For FY 2002-2003, the PUC requested $1,849,491 to 
establish a Capital Improvement Program Team to 
manage the capital improvement program. The Budget 
Committee has recommended this request for approval by 
the Board of Supervisors. The requested $1,849,491 
includes $1,186,491 for 18 new positions (13.50 FTEs in 
FY 2002-2003) and $663,000 for contractual services, 
materials and supplies, and equipment. Ms. Madden 
states that the PUC has implemented a hiring plan to 
staff the new Capital Improvement Team by October 1, 
2002. Recruitment has been underway for some time for 
the program manager positions, and the PUC is initiating 
an examination process to establish a permanent list for 
such positions. Selections are currently being made from 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
20 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



the Senior Engineer and Association Engineer lists. The 
PUC intends to make all administrative and clerical 
appointments by October 1, 2002, according to Ms. 
Madden. Attachment IV, provided by the PUC, contains 
the proposed capital improvement program staffing plan 
and an explanation of the FY 2002-2003 capital 
improvement program objectives. 

Proposed Charter Amendment 15 

22. According to Ms. Vicki Clayton of the City Attorney's 
Office, a proposed Charter amendment (File 02-0887) 



would establish the PUC's exclusive control of water and 
clean water utilities; rate setting standards and methods; 
the transfer of surplus funds between utilities; 
independence in contracting; purchasing, hiring, and 
selection of contractors; reporting and planning 
requirements; and authorization of revenue bonds or 
other financing methods without voter approval, if this 
proposed Charter Amendment is adopted by the voters. 
Ms. Ostberg states that to the extent that this proposed 
Charter Amendment gives the PUC authority to issue 
bonds without voter approval, this Charter Amendment 
would negate the need for the proposed voter-approved 
revenue bond issuance of $1,628 billion in its current 
form. 

Fire Department 

23. While the PUC is responsible for managing the low- 
pressure water system, the Fire Department is 
responsible for managing the City's high pressure water 
system, the Auxiliary Water Supply System (AWSS). The 
Capital Improvements Advisory Committee expressed 
concern that the PUC has not consulted the Fire 
Department about the impact of its water system capital 
improvement projects on the AWSS. In Attachment I, Mr. 
Berry states that the proposed capital improvement 
program would not significantly affect, either positively or 
negatively, the performance or reliability of the Fire 
Department's AWSS. 



15 The other PUC Charter Amendment currently before the Rules and Audits Committee, File 01- 
2056, addresses PUC financing authority in relation to the power system only. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



Summary of the 

Issues Noted by the 

Budget Analyst: 1. The Budget Analyst notes a number of issues which 

could impact the size of, and potential voter support for, 

the proposed revenue bond issuance: 

• The PUC's projected 174.3 percent increase in water 
rates payable by San Francisco ratepayers over the 
first 13 years of the capital improvement program 
would adversely impact San Francisco ratepayers who 

currently pav the second lowest water rates in the Bay 

Area. The Budget Analyst projects that San Francisco 
businesses would pay a total compounded water 
service rate increase of between 102 and 133 percent 
over the same 13 year period. 

• The PUC will not be able to issue its proposed rate 
study report, which will ensure that rates are fairly 
distributed among customer classes, before the 
November of 2002 election. 

• The Proposition H water rate and sewer service charge 
freeze has had a negative impact on the PUC's credit 
ratings, increasing interest rates by an estimated 0.2 
percent, which increases debt service by $2,000,000 
annually for every $1 billion of revenue bonds issued. 
Proposition H does not expire until July 1, 2006. 

• The need for the proposed voter-approved revenue 
bond issue could be negated if voters approve a 
Charter Amendment proposed for the November of 
2002 ballot (File 02-0887) which would give the PUC 
authority to issue bonds without voter approval. 

• According to Mr. Berry, concerns have been expressed 
by representatives of residential landlords and tenants 
over whether or not the proposed resolution should 
permit residential landlords to recover water rate 
increases from tenants in rent-controlled units. 

2. The Budget Analyst notes that the PUC's Program 
Management Consultant contract with the San Francisco 
Water Alliance, now reconstituted as the Water 
Infrastructure Partners, has, to date, failed to (a) fully 
integrate PUC and contractor staff, and (b) provide 
significant. documented. and verifiable capital 
improvement program management savings despite the 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
22 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

PUC's assurances to the Board of Supervisors that such 
savings are achievable. 

3. The Budget Analyst also notes the PUC's historic 
difficulty in filling vacant engineering positions in the 
PUC's Utilities Engineering Bureau which is a key 
resource for implementing the proposed capital 
improvement program funded by the proposed revenue 
bonds. 

Recommendation: Approval of the proposed resolution is a policy matter for 
the Board of Supervisors. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 
23 



Appendix 1 
Page 1 of 5 

APPENDIX 1; INDEPENDENT EVALUATIONS OF THE CAPITAL 
IMPROVEMENT PROGRAM 

R.W. Beck 

R.W. Beck's May 21, 2002 report on the capital improvement plan concluded that: 

• While supportive of the capital improvement program planning approach, Bay 
Area Water Users Association (BAWUA) members are frustrated by the PUC's 
slow progress in implementing the capital improvements. BAWUA has 
introduced State bills to create an agency which would allow BAWUA members 
to directly fund needed regional water system capital improvements. 

"i BAWUA members are concerned whether the PUC intends to continue to be a 
regional water provider that will meet BAWUA members' water supply 
requirements for the long term. 

• The criteria for selecting, sizing, and measuring the performance of capital 
improvement program projects needs to be more fully developed, with 
quantifiable objectives and standards. 

• The proposed capital improvement projects are necessary to maintain the 
regional and local water systems. 

• The proposed capital improvement projects are at varying levels of definition 
and investigation, so the accuracy of the cost and schedule information varies. 
The PUC and its Program Management Consultant had endeavored to 
standardize the costs and schedules. R.W. Beck characterized this work as 
"diligent" and "methodical," stating that the approach followed by the PUC and 
the Program Management Consultant was "consistent with, and probably better 
than that used by most similar utility systems in preparing CIP programs." 

• The consolidated capital improvement program/long-range financial planning 
process clearly prioritizes projects, ensures better cost estimates, and provides a 
valid basis for approval and adoption. 

• Annual review of the capital improvement program by the PUC is appropriate. 

• Historically, the PUC. has tracked capital improvement program costs by 
classification of project which makes it difficult to evaluate the performance of 
individual projects. 

• The long-range financial plan is logically constructed and is based on reasonable 
financial assumptions. 



24 



Appendix 1 
Page 2 of 5 

• Proposition H 1 poses serious threats to the PUC's ability to maintain satisfactory 
reserves and coverage ratios to support the debt that will be needed to fund the 
capital improvement program. 

• The community needs better information on the costs and trends in other cities 
facing similar issues. 

R.W. Beck further concluded that there is a significant risk that the planned level of 
project delivery will not be achieved, especially in the initial years of the program, 
because of: 

• The relative inexperience of the PUC's Capital Improvement Program Manager 
in implementing a capital improvement program of this magnitude and 
complexity. 

• The vacancy of the Assistant General Manager for Infrastructure position. 
According to Mr. Jeet Bajwa of the PUC, this position has been vacant since 
November of 2001. After several internal PUC candidates were considered, the 
PUC hired an external recruitment consultant to advertise the position in May 
of 2002. Ms. Ostberg advises that an interim Assistant General Manager for 
Infrastructure, Mr. Donald Birrer, a former PUC General Manager, was 
appointed on July 1, 2002, while the national recruitment search continues. The 
PUC expects to fill the position by September of 2002, according to Ms. Ostberg. 

• The PUC's cumbersome hiring practices. 

• The status of the program/project monitoring and controls system. Mr. Bajwa 
states that an evaluation of several control system tools is currently underway, 
with a decision expected to be made in December of 2002. 

• The potential 12 to 24 month delay in hiring a new program management 
services contractor if the current Program Management Consultant is replaced. 



1 Proposition H, approved by the voters on June 2, 1998, freezes water rates at their current levels 
until July 1, 2006, proposed to the following exceptions: 

• The rate freeze does not apply to the fees charged to customers located outside of San Francisco. 

• The rate freeze could be suspended if the City declared an emergency, as defined by Charter 
Section 3.100. 

• The rates could be increased to repay the money borrowed through the City's issuance of bonds 
for improvements to the water system approved by the voters m November of 1997 (Propositions 
A and B), but such increases cannot exceed a total of 18 percent during the period between July 
1, 1998 and July 1, 2006. 

• The rates could be increased to repay money borrowed from further improvements to the water 
system approved by voters m the future. 

The effective date of Proposition H, July 1, 1998 followed two years of rate freezes self-imposed by 
the PUC. Therefore, Proposition H froze rates at their 1996 levels through June 30, 2006, with the 
exception of the 18 percent increase allowed for debt service related to Propositions A and B Water 
Revenue Bonds. Of the $304,000,000 authorized by Propositions A and B, the issuance of 
5140.000,000 in Water Revenue Bonds during FY 2001-2002 necessitated an 8.65 percent average 
rate increase for retail customers. The anticipated issuance of the remaining S164.000.000 in Water 
Revenue Bonds during FY 2002-03 will necessitate a further S.60 percent average rate increase for 
retail customers, for a compounded cumulative rate increase of 17.99 percent over two years, thereby 
hitting the 18 percent cap imposed by Proposition H (File 02-0904) 



25 



Appendix 1 
Page 3 of 5 

• The need for a tenfold increase in the rate of project delivery. The PUC has 
historically developed and implemented capital projects at a slow pace. 

• The lack of project accountability related to cost and schedule. 

• The lack of an Asset Management Plan to follow-up on capital improvement 
projects after completion. 

• The cumulative effect of all of the tasks scheduled to be accomplished over the 
next 12 months. 

Based on the above conclusions, R.W. Beck recommended that the PUC: 

• Coordinate with BAWUA to (a) refine the Regional Water Master Plan to reflect 
mutually agreeable performance standards, (b) conduct an integrated resources 
management plan, and (c) evaluate alternative regional associations for 
implementing critical regional water improvements. 

• Formally adopt the capital improvement program, establish a process for the 
annual update, reporting, and/or approval of changes, and declare that the PUC 
intends to be a long-term regional provider of water. 

• Continue to use the cost model, capital improvement program scheduling, and 
"optioneering" 2 tools developed over the last two years. 

• Make hiring an Assistant General Manager for Infrastructure a top priority to 
(a) manage external communications and expectations, and (b) develop a 
Business Plan with the Program Management Consultant. 

• Establish a joint venture between the PUC's Capital Improvement Program 
Group and the Program Management Consultant to establish a clear and 
integrated working relationship between the two organizations. Such an 
arrangement is not unusual in implementing major public sector projects with 
private consultants, according to R.W. Beck. 

• Develop a dual-track or contingency plan approach for capital improvement plan 
implementation during the first several years. 

• Develop an Asset Management Plan to track future system maintenance and 
capital replacement requirements. 

• Implement a capital improvement program oversight committee to conduct an 
annual review of the capital improvement program. 

• Implement an internal Technical Advisory Committee to provide oversight of 
individual capital improvement program projects. 

• Streamline PUC review and approval processes. 

• Capitalize interest over three years rather than two years to better represent the 
costs incurred prior to project commercialization. 



- ''Optioneermg" is a process which uses alternative analyses to (aj identify the real project needs, 
(b) determine the appropriate evaluation criteria, (c) evaluate solutions against those criteria, (d) 
select the optimum project, (e) define the design base, and (f) obtain engineering and customer 
concurrence. The optioneermg assessment should include capital and operating costs, specification 
requirements, environmental implications, and preliminary schedules. 



26 



Appendix 1 
Page 4 of 5 

Take the steps necessary to protect bond ratings given the capital improvement 
program's debt financing requirements. 

Review the formula for calculation of Suburban Water Revenue Requirements 
when the Master Water Sales Contract is renewed. If possible, the PUC should 
amend the Master Water Sales Contract (which is due to expire on June 30, 
2009) prior to any additional bond issues. If revenues can be more closely tied to 
debt service, the financial communitv's confidence should be enhanced. 



Blue Ribbon Panel 

In April and May of 2002, the R.W. Beck evaluation was reviewed by a Blue Ribbon 
Panel of professionals with expertise in water delivery, infrastructure, planning, 
finance, and other disciplines, convened by the San Francisco Planning and Urban 
Research Association (SPUR) 3 . The Blue Ribbon Panel concluded that the R.W. 
Beck evaluation was "very competent, comprehensive, rigorous, accurate and on 
target for this stage in the [capital improvement] program." The Blue Ribbon Panel 
further recommended that: 

• Develop project management and accounting mechanisms which allow for real- 
time assessment of project status and cost-run rates, and which are consistently 
applied to all capital improvement projects. 

• Fully integrate the Facilities Reliability Program (seismic) and the Water 
Supply Master Plan (conservation, desalination, and recycling), and develop 
detailed, regularly updated system recovery plans. 

• Clearly delineate seismic design, water reliability, and drought supply 
standards. The capital improvement program should be flexible enough to adapt 
to higher water treatment standards in the future. An analysis should be 
conducted of whether system replacement every 100 years is an acceptable life 
cycle. 

• Explain to the public the reasons for potential uncertainties in project cost 
estimates in order to allay public concerns about budget overruns. 



3 The panel members were (a) Jim Chappell. SPUR, (b) Margaret Bruce. Silicon Valley 
Manufacturing Group. Co Dennis Diemer. East Bay Municipal Utility District, (d) David Dowali. 
University of California, (e) Jeanne Myerson. San Francisco Chamber of Commerce, (f) John Wise. 
Natural History Institute, and (g) Greg Zlotnick. Santa Clara Valley Water District. 



27 



Appendix 1 
Page 5 of 5 

Report on the projects planned and completed pursuant to Propositions A and 
B 4 , as well as an assessment of who those projects relate to the capital 
improvement program. 

Develop a larger policy context to guide implementation and define priorities in 
terms of environmental stewardship, environmental justice, stakeholder 
involvement, the PUC's role, regional service commitments, integrated resource 
planning, and regional crisis planning. Once policies and goals are established, 
they should be translated into performance measures. 

Streamline contracting procedures and incorporate penalties for cost overruns, 
sharing of cost savings, and bonuses for completion ahead of schedule. 
Clearly differentiate between projects which require permanent staff (for 
ongoing utility functions) and projects which require consultants (for time- 
defined tasks). 

Develop a rate structure which includes incentives for suburban customers to 
reduce peak water usage. Reduction of future peak demands could reduce the 
size of future facilities and, therefore, capital improvement program costs. 
Take account in the long-range financial plan of lower interest rates for bond 
money. 



4 In November of 1997, voters approved $157,000,000 of Water System Reliability and Seismic 
Safety Bonds and $147,000,000 of Safe Drinking Water Revenue Bonds, for a total of $304,000,000. 
According to Ms. Ostberg, the PUC spent the first 18 months planning and designing the 
construction projects and putting a commercial paper program into place. While the ordinances 
indicated that revenue bonds would be the ultimate funding source for the projects authorized by 
Propositions A and B, from July of 1999 the PUC used commercial paper to fund the initial 
expenditures because commercial paper provided greater flexibility and lower interest rates. The 
PUC issued S140.000.000 of these bonds in August of 2001. of which approximately $85,000,000 was 
used to refund outstanding commercial paper notes, and the remaining $164,000,000 is anticipated 
to be sold m FY 2002-03. The proceeds of that second issue will, after payment of issuance costs, be 
used to retire all outstanding commercial paper notes, and the remainder will be applied towards 
approved Proposition A and B projects. Of the seismic and safety projects, at February 28, 2002. 35 
percent were complete, 57 percent were underway, and 8 percent had not been started. Of the water 
quality projects, at February 28. 2002, 28 percent were complete and 72 percent were underway. 



28 



Appendix 2 
Page 1 of 2 

APPENDIX 2: FINANCING ISSUES 

Water Enterprise Credit Rating 

On June 10, 2002, the Budget Analyst issued a Review of Best Practices for 
Financing Large Capital Improvement Projects at Municipal Utilities in the State of 
California, which was prepared in conjunction with the Legislative Analyst's Office, 
the Mayor's Director of Public Finance, and the PUC. In that report, the Budget 
Analyst concluded that the Proposition H rate freeze has had a negative impact on 
the Water Enterprise's credit ratings. 

Prior to the rate freeze, Moody's rated the Water Enterprise as "Aa" and Standard 
and Poor's rated the Water Enterprise as "AA with a stable outlook." Now, Moody's 
rates the Water Enterprise as "Al" and Standard and Poor's rates it as "A+ with a 
stable outlook." Of the 12 major Californian public utilities surveyed by the 
Legislative Analyst's Office, the Water Enterprise (in combination with the Clean 
Water Enterprise) had the lowest Moody's and Standard and Poor's ratings. Both 
rating agencies advised the Legislative Analyst's Office that ratings upgrades would 
not occur until the Water Enterprise's financial profiles, as measured by factors 
such as debt service ratios, improve dramatically, coupled with reassurances that 
the capital improvement program would be implemented and supported with a 
credible and sustainable financial plan. Such financial improvements could only 
occur by increasing water service rates and obtaining rate-making authority to 
further increase water service rates in the future in order to ensure financial 
stability, flexibility over capital improvement program implementation, and funding 
authorization. 

Financial projections for the Water Enterprise indicate that its financial viability 
will largely be maintained through FY 2006-2007, and that the City will be able to 
meet the debt service coverage requirements contained in the Water Revenue Bond 
covenants 1 . However, these projections do not include funding the capital 
improvement program's water projects. The Mayor's Director of Public Finance, 
Ms. Monique Moyer, estimated that the Water Enterprise's lowered credit ratings 
would result in a 0.2 percent increase in interest rates if the PUC issued new 
revenue bonds today, which is $2,000,000 of additional debt service annually for 
every $1 billion of revenue bonds issued. 



1 Debt service coverage requirements in the revenue bond indentures require that net re% - enues. 
together with unappropriated fund balances, in each fiscal year must be equal to at least 1.25 times 
more than the revenue bond annual debt service due in that fiscal vear. 



lr 



Appendix 2 
Page 2 of 2 



Other Financing Options if Insufficient Voter Support 



According to the Long-Range Financial Plan, without additional voter-approved 
debt, capital investment in the water system will be limited to the approximately 
$20,000,000 annually which can be supported by operating revenues. Attachment I, 
provided by the PUC, explains the full range of options available to the PUC if the 
proposed bond measure was not passed by the voters. These options are: 

• Delaying projects until voter approval is secured. 

• Delaying replacement and repair projects until after the July 1, 2006 expiration 
of the Proposition H rate freeze, at which time three-quarters of the Board of 
Supervisors could approve such projects (barring any other voter-imposed 
restriction). 

• Losing PUC control of the regional water system to a regional financing 
authority. 

The Budget Analyst notes that there is also the option of entering into an 
agreement with regional water service customers, and perhaps with the State, to 
permit regional participants to directly finance regional projects and jointly assume 
the risks involved. Under this scenario, the city would pay one-third of the cost of 
such projects by making payments to a Joint Powers Authority formed by its 
customers. This approach would raise issues about the ownership of improvements, 
operation of the regional system, and the governance and powers of the Joint 
Powers Authority. 



Charter Section 9.107 

There are exceptions to the voter approval requirement of Charter Section 9.107 
which mandates that the issuance of revenue bonds for the water system be 
approved by a simple majority of the electorate. Revenue bonds can be issued for 
the water system with a three quarters approval of the Board of Supervisors if the 
proceeds of such bonds are used to: (a) comply with a State or Federal order, (b) 
reconstruct or replace existing water facilities under the PUC's jurisdiction, or (c) 
create or maintain alternative energy sources. 

In Attachment I, Mr. Bill Berry of the PUC advises that "a portion of the projects 
for the local water system qualify for financing pursuant to this provision." 
However, Mr. Berry notes, as a result of the Proposition H rate freeze, rates could 
not be raised to fund debt service on bonds that do not have voter approval. 
Therefore, issuance of bonds under Charter Section 9.107 would be restricted until 
after July 1. 2006, and could be restricted by future voter action. 



30 



11.-03-2602 

o 



F'.JC FINANCE 



Attachment I 
Pase 1 or 6 



F.Ql/'Qfa 



San Francisco Public Utilities Commission 



MEMORAKOUn 




DATE: July 3, 2002 

TO: Board cp Supervisors' Bucget Analyst 

FROM: Bill Eerry, Assistant General Manager 

for Finance &. Administration, SFPUC 

SUBJECT: Water Bond Measure (File 02-0910] 



cc: Patrica E. Marts'., GM, SFPUC 



Summary 

TTiis memorandum is intended to respond to certain questions raised by the Board of 
Supervisors' Budget Analyst In its review of the proposed bond measure for the Water 
Enterprise. 

Follow-up to RW Beck & Blue Ribbon Panel 

As noted in the Budget Analyst's report, the SFPUC retained RW Beck to review its proposed 
Capital Improvement Program and Long-Range Financial Plan. RW Beck was selected by the 
5FPUC based on Beck's national reputation for providing Independent reviews associated 
with Bond Financings and capital programs In the water and wastewater areas, and because 
RW Beck had not provided other consulting or engineering services to the SFPUC in the 
past. 

RW Beck's report provides a review of three areas: 

a CIP Process: RW Eeck reviewed the development and validity of the CIP as proposed 
by SFPUC staff. 

b CIP Implementation: RW Eeck reviewed the SFPUC's ability to successfully deliver 
the proposed program in an efficient and timely manner. 

n CIP Revenue Requirements: RW Eeck reviewed the proposed Long-Range Financial 
Plan. 

In general, RW Beck concluded that the proposed CIP was developed through a 
Comprehensive Process, that the CIP projects are good and necessary, and that the CIP 
effort and level exceeded the norm. In addition, RW Beck concluded that the LRFP was 
logically constructed and functionally correct, and that the financial assumptions are 
reasonable. 

In its review of CIP implementation, RW Beck noted a number of challenges, including 
leadership concerns, staffing and hiring, and concerns related to the SFPUC's program 
management consultant. RW Eeck provided a number of specific recommendations, with 
which the SFPUC concurs completely. The SFPUC has already initiated follow-up in a number 
of key areas: 

b Leadership: The SFPUC has hired Don Blrrer (formerly Executive Director of the 
Clean Water Program and General Manager of the SFPUC) as Interim Assistant 
General Manager for Infrastructure to provide hlgh-levei leadership to the CIP. The 
SFPUC's new CIP Group and its Utilities Engineering Bureau, led by Karen Kubick and 
Michael Quan, respectively, will reoort to Mr. Birrer. In accition, rne SFP'JC has a 
recruitment effort underway to Identify zr\c hire a permanent agm for Infrastructure 



31 



jijL-Q3-2eea 17:21 fuc finance , ..=■<= 

— ' Attachment I —- 4S? 525S P.02.-CS 

Water 3cno Measure (File 02-0910) -2- r ' £ S e - or ° July 3, 2002 

with the expectation that this process will be completed by the end cf September 
2002. 

= Program Management Consultant: With the concurrence of the Board of Supervisors, 
the SFPUC has retained the Water Infrastructure Partners, led by Jacobs Engineering 
and Primus Inc., as Its program management consultant following the departure of 
Bechtel from the San Francisco Water Alliance joint venture. 

c Staffing and Hiring: The SFPUC has undertaken a concerted effort to Identify and 
hire qualified candidates to fill positions critical to implementing the capital 
improvement program. The initial results of a widespread recruiting effort are 
encouraging and we expect to have the key positions filled within the next few 
months. 

- Other Recommendations: The SFPUC concurs with most of the implementation- 
related recommendations from RW Beck and is committed to implementing them 
under the direction of the AGM for Infrastructure and with the support of other 
departments of the SFPUC. 

As noted in the Budget Analyst's report, an independent Blue Ribbon Panel, at the request 
of the SFPuc's General Manager, reviewed the RW Beck evaluation. In addition to their 
conclusions about the excellent quality of RW Beck's review, the Panel provided a number of 
policy recommendations to the Commission. The SFPUC concurs with these 
recommendations and plans to implement them. 

Potential Impact of State Legislation 

The Budget Analyst's report notes the three bills under consideration by the California State 
Legislature that could impact San Francisco's control and operation of the Hetch Hetchy 
Water System. These bills are further described below: 

a SB 1870 (sponsored by State Senator Jackie Speler): This bill has been 
approved by the State Senate, Is now pending in the Assembly, and the Governor 
has indicated his intention to sign it. Effective Januar/ 1, 2003, SB1870 would 
establish the San Francisco Bay Area Regional Water System Financing Authority to 
assist in financing construction of projects on the regional Hetch Hetchy system. 
Upon passage, it would be possible for the Authority to issue revenue bonds on 
behalf of the wholesale customers of the water system to finance regional projects. 
The Senate has approved this legislation, but passage by the Assembly is not 
expected until August. The Governor has indicated he will sign it. 

This could effectively reduce the proposed bond measure by approximately $2 billion. 
It would still be necessary, however, for San Francisco voters to approve bond 
financing for the San Francisco share of the cost of capital improvement projects on 
the regional system (approximately $900 million for the proposed CIP) and to fund 
projects related to the local distribution system (estimated at $715 million). 

= AB1823 (sponsored by Assemblyman Lou Papan): AB1323 would require the 
City to adopt a Capital Improvement Program and Emergency Response Plan by 
February 2003. The City would be required to complete nine specific regional water 
projects within a specific timeframe contained within the bill. The entire regional 
Capital Improvement Program would be subject to oversight cy the State 
Department of Health Services (DHS), a role that heretofore they have net 
performed nor are equipped to perform within the state. The bill also further extencs 
this DHS oversight en the operation and maintenance of the regional water system, 
including budgets and power operations. There sre many other portions of the bill I 

that the City has also found to be disagreeaole. The City continues to opocse this bill 



3z 



JUL-Q3-2QQ2 17:32 PJC FINANCE _ 4 , 5 .=7 ««, 

Water Bono Measur£ (File 02-0910) -3- Pa S e 3 ot o July 3, 2002 



AB2058 (sponsored by Assemblyman Lou Papan): AB20SS creates the Bay 
Area Water Supply and Conservation Agency, which would have the ability to plan, 
finance, build, and operate facilities for collection, transmission, reclamation, reuse, 
and conservation. The Agency could also acquire water and water rights, develop 
and store water, and sell water. 

If SB 1870 (Speier) were enacted, the San Francisco Bay Area Regional water 
System Financing Authority would be charged with Issuing revenue bonds for the 
SFPUC's Regional Water Capital Improvement Program. In contrast, the Agency 
created by AB 2053 would be able to build various local water projects for the 29 
wholesale customers who have agreed to participate in the authority, separate and 
distinct from the Hetch Hetchy system, AB 2058 would not impact the SFPUC's CIP. 

R&R Pr o ject Fin a ncing wi thout V o ter Approval (Charter Section 9] 



Under Charter Section 9.107, the SFPUC may, upon vote of three-quarters of the Board of 
Supervisors, Issue revenue bonds "for the purpose of the reconstruction or replacement of 
existing water facilities" (R&R Bonds). As a result of the Proposition H rate freeze, rates 
could not be raised to fund debt service on bonds that do not have voter approval. 
Therefore, issuance of bonds under this provision of the Charter is restricted until after July 
1, 2006, and could be further restricted by future voter action. 

A portion of the projects for the local water system qualify for financing pursuant to this 
provision (an opinion of the City Attorney and Bond Counsel has been requested to further 
refine eligibility requirements). Therefore, It would be possible for the Board (upon the vote 
of three-quarters of the members) to approve the issuance of bonds for eligible projects 
beginning in four years. Voter approval would be necessary for non-R&R projects, or the 
bulk of regional facilities, local recycling projects, and selected other projects. 

Availa ble Options if Bond Measure Fails 

While there is evidence of strong public support for a bond measure intended to protect the 
water system, the following options are available if the proposed bond measure fails: 

a Non-R8cR projects would have to be delayed until voter approval is secured. 

b Projects eligible for R&R status could be approved by three-quarters of the Board 
members for issuance after expiration of the Proposition H rate freeze. The CIP 
would have to be delayed until that time. 

= Given the need to complete regional system capital projects, there is a risk that the 
State Legislature would adopt legislation removing SFPUC control of the regional 
water system, authorizing the issuance of revenue bonds by the Financing Authority, 
and requiring surcharges for San Francisco retail customers to cover their allocable 
share of debt service on bonds, 

CIAC-Reiated QuFSTiq^ 

The Budget Analyst's report notes certain questions raised by the Controller and the Mayor's 
Director of Public Finance at the June 28, 2002, meeting of the Capital Improvement 
Advisor/ Committee (CIAC). While the SFPUC is meeting with the Controller and Director on 
July 3, 2002, to further discuss their concerns, the SFPUC believes that its CIP and Long- 
Range Financial Plan provide the most reasonable method of estimating future costs and 
providing for uncertainty in inflation, interest rate and other assumptions. A discussion of 
the specific questions mentioned in the Budget Analyst's report is provided below: 

a Size of Proposed Bond Measure: The Commiss.cn has reouested the Board olace a 
S3. 5 billion bond measure en the November ballot :c finance water system 



JUL-as-seea 17:32 fuc finance Attachment I «« «? 5258 P.e^-es 

Water Bono Measure (File 02-0910) -4- Page 5 or o July 3, 2002 

improvements. As noted elsewhere In this memorandum, the creation of a Regional 
Financing Authority by S31870 would provide a new mechanism for financing the 
share of costs supported by our wholesale customers, and reduce the required bond 
authorization to approximately $1.6 billion. The SFPUC is reasonably certain that this 
legislation will be approved and Is willing to consider a reduction in the proposed 
ballot measure authorization at this time. 

The Controller and Finance Director have questioned whether the proposed bend 
authorization might be reduced by changes in various assumptions, including some 
discussed below. It is important to note that our Long-Range Financial Plan provides 
a conservative estimate of future costs based on the cost estimates for capital 
projects contained in the CIP. We recognize that actual results will vary based on a 
variety of factors, and that we cannot provide certainty that the estimates provided 

for this program will be achieved. Nevertheless, it is important to let our ratepayers 

know what kind of rate increases they can expect to rund this program. If the 
proposed projects are executed according to the CIP schedule, the current LRFP 
provides the best estimate of the amount of required bonds and rate impacts. 

= Impact of Proposed Legislation: The potential Impact of the proposed Speier 
Legislation (SB1870) on the amount of bonds required has been addressed 
elsewhere In this memorandum. Financing projects on behalf of the regional 
wholesale customers using this mechanism represents a significant change in 
approach. Currently, costs allocated to the wholesale customers based on the Master 
Water Sales Contract. In general, projects must be completed and placed into 
service before the wholesale customers begin paying. The City must finance projects 
prior to that time, although capitalized interest Is assumed during construction so as 
not to burden City ratepayers. 

On the other hand, after projects are placed in rate base, the wholesale customers 
pay a rate of return (based on the City's embedded cost of capital) and straight-line 
depreciation. The City recovers its full cost over the life of an asset using this 
methodology. However, the Initial combination of rate of return plus depreciation 
exceeds the City's incremental debt service attributable to the wholesale customer's 
two-thirds share of project costs. This "extra" revenue has been used to keep rates 
for City customers lower than they would be if all customers, retail and wholesale, 
paid a pro rata share of debt service at all times. 

Therefore, one impact of financing wholesale costs under SB1870 will be somewhat 
higher rate Increase estimates for City customers In the future. The SFPUC believes 
that this impact can be offset somewhat by the use of capitalized interest to phase in 
debt service costs gradually. 

Note that the change in methodology would not result in a shifting of the long-term 
burden of costs between City and wholesale customers, as the wholesale customers 
pay their full share of costs under the Contract. 

= Conservative Assumptions — Contingency and Management reserves: The CIP is 
built on cost estimates for each of the 77 Individual projects in 2003 dollars. These 
costs are escalated based on the length of construction for each project and a three 
percent annual inflation rate. There is an expected variance on each project cost 
estimate because the projects have not completed final design and engineering. The 
San Francisco Water Alliance reviewed each estimate and conducted a statistical 
analysis to determine what the variability of the cost estimate for the entire program 
of 77 projects would be. They recommended a total 15 percent contingency and 
reserves to provide a 75 percent confidence of delivering the entire program within I 

the overall cost estimate. Therefore, the program contains 5409 million of ! 



3- 



10.-03-2202 17=33 FUC FiNfiNCE _ , T 415 4 c 7 cp^ - n<r - . 

Water Bond Measurs (File 02-0910) -5 -Page 5 or July 3, 2002 

contingency and reserves for this purpose. These provide a measure of protection 
against cost overruns on individual projects and unforeseen events or changes In 
regulations. Contingencies of this nature are recommended for capital projects and 
programs, and the SFPUC believes the level of such funds for this CIP is appropriate. 
This belief has been confirmed by the independent engineering firm, RVV Beck, that 
reviewed the CIP and LRFP. 

a Amount of Capitalized Interest: The LRFP assumes that interest will be capitalized 
for two years at the bond interest rate (5.5 percent) for each capital project. Without 
capitalized interest, it would be necessary to raise rates earlier and in greater 
amounts than is shown in the LRFP. The Controller questioned whether the 
capitalized Interest assumption Is based on the fact that City ratepayers must "carry" 
the cost for wholesale customers while projects are under construction. Capitalized 
interest is necessary irrespective of this factor. Without It, rates would have to be 



increased more quickly. In aaoition, If the proJet-Lb for the Subui L un customers ar 



financed through the Financing Authority, as expected, capitalized Interest will be 
more necessary to protect City ratepayers against higher rate increases required as a 
result of the loss of the incremental subsidy provided by the wholesale customers 
under the Contract. 

The capitalized Interest amounts are conservative in a different sense, however. It is 
assumed that interest will be capitalized at the bond rate. It Is the SFPUC's 
expectation that we will, use commercial paper or other short term instruments to 
fund a portion of construction costs. CP carries significantly lower interest rates. 
However, the SFPUC has chosen to assume the higher costs because it cannot be 
assured of access to the credit and liquidity markets for CP at all times. 
Nevertheless, to the extent CP is used, the SFPUC would need to issue fewer bonds 
than assumed by the LRFP. Note that RW Beck recommended the SFPUC capitalize 
interest for three rather than two years. The SFPUC believes that the use of CP 
mitigates against the need to increase the amount of capitalized interest assumed in 
the LRFP. 

n Impact of Proposition H or Subsequent Referenda: Proposition H effectively 
freezes rates at 1998 levels through fiscal year 2006. There remains the possibility 
of a similar measure taking effect in future years which would inhibit SFPUC's ability 
to raise rates to support bonds necessary to finance essential improvements to the 
system . 

b Alternative Scenarios using Charter Section 9.107 R&R Bonds without Voter 
Approval: There are some projects which, in our opinion, may be qualified as 
"reconstruction" projects and as such could be financed without voter approval 
pursuant to trie Charter. (We have requested the City Attorney to formally define 
''reconstruction" projects as it relates to the Charter.) However, bonds can only be 
supported by an increase in rates, which cannot occur under the terms of Preposition 
H period. 

Fire Department AWSS System 

The Fire Department's Auxiliary Water Supply System (AWSS) is functionally independent of 
the SFPUC's water distribution system. The AWSS storage facilities - Twin Peaks Reservoir, 
Jones Street Tank and Ashbury Tank - are filled with potable water form the PUC system, 
however, once the water enters the AWSS system it is no longer potable. There are no 
other physical connections between the two systems. 



35 



IUL-Q2-2202 17:23 FUC FINPNCS Attachment I -15 ,£7 325= P.2^2S 

Water Bono Measure (File 02-0910) -6- Page 6 of 6 July 3, 2002 

The AWSS system was conceived following the 19Q6 earthquake and fire. The AWSS system 
is designed to withstand higher water pressures and ground movement than the SFPUC's 
potable water system. In addition to the system's storage facilities, the AWSS can be 
supplied with salt water by the Fire Department's two pump stations or by fire boats 
through manifolds on the water front. 

The AWSS system does not cover the entire City. The system coverage is most dense in the 
area north of Mission Street and east of Van Ness Avenue. Where it is available, however, it 
is routinely used by the SFFD in lieu of, or as a complement to, the water supply available 
through the SFPUC's distribution system. The AWSS's larger diameter lines and higher 
pressures make it a more effective fire fighting tool. 

The vast majority of the work proposed In the QP Is in the regional water system, local 

— st o ra g e, and loca l transmission systems . Tran s mission lin es c o nvey w a ter t o a n d betwe en 

storage facilities, and distribution lines convey water to customers. The Fire Department's 
low pressure hydrants are connected to the SFPUC's distribution lines. 

In summary,, the proposed CLP, because of it emphasis on regional water supply and 
transmission, will not significantly effect, either positively or negatively, the performance or 
reliability of the Fire Department's AWSS. Nor will the CIP include improvements to the local 
water distribution system such that it would improve the reliability or performance of the 
AWSS. 

If you have any questions or desire additional information, please email me at 
wberrv@Duc.sf.ca.us or call me at (415) 554-2457. 



36 



DATE: 

TO: 

FROM: 

SUBJECT: 



Attachment II 
Page 1 of 3 



San Francisco Public Utilities Commission 




MEMORANDUM 



July 10, 2002 

Board of Supervisors' Budget Analyst 

Bill Berry, Assistant General Manager 
for Finance & Administration, SFPUC 

Water Bond Measure (File 02-0910) 



cc: Patricia E. Martel, GM, SFPUC 



The following illustrates the projected debt service relating to the Water Enterprise if the 
entire amount of $1,628 billion of proposed bonds are issued. Attached are the numerical 
data that supports this table. 



Projected Water Debt Service 



ifin nnn 






^ 140,000 - 

o 
o 




^^ 






g 120,000 - 






« 100,000 - 

> 




w 


OT 80,000 - 






« 60.000 - 




HT Proposed Bonds 


5 40,000 - 






c 

< 20 000 - 




HnraBBB^^n^uthorirect Bonds 




- 'Wj 


-$? ^ '£ <& \ N j? ^p JS ^ a n $> <$> £ & ^ 

,v ,n? ,i? ,t? ,1? ,v ,n? ,v ,v ,v ,v ,i? ,i? ,i? ,t? 
« A <A <+ ^ ^ ^ ^ ^ ^ ^ ^ ^ <A ^ <a 



If you have any questions or desire additional information, please email me at 
wberry (5)puc.sf.ca.us or call me at (415) 554-2457. 



37 



Attachment II 
Page I of 3 



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38 



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Attachment III 



San Francisco Public Utilities Commission 



MEMORANDUM 




DATE: July 3, 2002 

TO: Board of Supervisors' Budget Analyst 

FROM: Bill Berry, Assistant General Manager 

for Finance & Administration, SFPUC 

SUBJECT: Water Bond Measure (File 02-0910) 



cc: Patricia E. Martel, GM, SFPUC 



The following tab l e comp a r e s th e current month l y water b i l l s of San Francisco t o other 
California water utilities. 

Comparison of Monthly Water Bills* 



Walnut Creek (CCWO) 

Dublin-San Ramon Sani. Dist. 

San Diego 

PaJoAlto 

EBMUD 

Hayward 

Fremont (ACWO) 

Sacramento 

San Jose 

Los Angeles 

San Francisco 

Santa Clara 




$0 $5 $10 $15 $20 S25 $30 $35 



'Comparisons among utility rates are difficult, as some systems are subsidized by oilier lax receipts. 



If you have any questions or desire additional information, please email me at 
wberrvaDuc.sf.ca.us or call me at (415) 554-2457. 



Attachment IV 
Pase 1 of 2 



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Attachment IV 
Page 2 of 2 



FISCAL YEAR 2002/2003 CIP PROGRAM OBJECTIVES 

The CIP will achieve the following objectives in Fiscal Year 02/03: 

Piogram Planning: 

■ Complete Phase I of the Facilities Implementation Plan - model various alternative 
designs to determine constructability and related costs 

■ Initiate CIP Environmental Review Process - begin programmatic and project level 
EIR documentation to facilitate timely project implementation 

■ Establish Prioritization Procedures - implement annually to reflect current needs and 
changes in scope 

-■- -Wentify-and^riorithze-CriticaheiP-Projects-^ facilitate the fflosl critical projects 
moving ahead on a critical timeline 

■ Develop Project Specific Request for Proposals (RFPs) for years 1 & 2 - procure 
specialty planning, design and construction management professional services 

■ Establish CIP Performance Measurements - measure program performance based 
upon budget, schedule, and operability 

Develop Internal Procedures: 

■ Create an Enterprise Work Breakdown Structure (WBS) - Program Manager will 
control project scope, schedule, and budget through Project Controls using a WBS to 
capture and report project information, and provide current information to stakeholders 

■ Develop Procedures for Updating the Annual CIP Budget - develop process to 
provide current budget and schedule information to the SFPUC, the Board of Supervisors 
and the Stakeholders 

■ Develop Change Order Control/Approval Process - manage contracts and track 
budget more effectively on a real time basis 

■ Develop Construction Management Procedures - standardize documentation and 
control practices for project managers to more effectively manage projects during 
construction 

■ Review Skills Inventory and Develop Staff Training Plan - based upon the assessment 
of skills and CIP requirements, utilize staff from SFPUC, DPW, and other City 
Departments in the fields of engineering, project controls, project management and 
construction management, and provide training as appropriate 

Develop and Implement Information Systems: 

■ Select Project Control System - track scope of work, budget expenditures, schedules 
and resource needs to provide a comprehensive, accurate, and timely program report to 
accommodate an enlarged database 

■ Procure Project Control System - acquire software license agreement and training 
Develop Project Control System Implementation Plan - develop a phased installation 
plan, to be implemented by the CIP staff, beginning with a pilot project to test and refine 
the Project Control System 

Procure Electronic Timecard System - this new system will replace the daily, manual 
timecards of engineering staff, by tracking project phases and engineering disciplines, to 
ensure more detailed, and timely reporting of labor costs 



Attachment V 
Page 1 of 2 



San Francisco Public Utilities Commission - Capital Improvement Program 

Local Water Projects 











SFPUC 




Start 
Project 


Construction 
Start 


In Service 
Date 


Proposal 


Project TrtJe 


Cost 2003 $ 


Non-R&R Projects 










Lincoln Way Transmission Line 


2003 


2005 


2007 


S11.17S 


Groundwater Projects 


2003 


2005 


2007 


13,706 


Recycled Water 


2003 


2007 


2010 


102,735 


Cross Town Transmission Main 


2005 


2007 


2009 


17,415 


$nn^pt <~imiiarioo Improvements 


2Q05- 


- _20O7_ 


- -2009 


6,7-71 


Pre Protection at CDD 


2006 


2008 


2008 


1,713 


Key Motorized and Other Critical Valves 


2006 


2008 


2009 


11,945 


Noe Valley Transmission Main Ph2 


2006 


2009 


2010 


8,736 


SEWPCP - Water redamaoon 


2008 


2010 


2011 


7,194 


New Northwest Reservoir 


2008 


2010 


2011 


29,594 


Lake Merced Pump Station Essential Upgrade 


2009 


2012 


2014 


59,144 


Total Non-R&R Projects 


5270,128 


R&R Projects with Construction Starting Before 10/2006 










Pump Station Upgrades (Summit) 


2003 


2005 


2006 


$4,914 


Pump Station Upgrades (Crocker Amazon) 


2003 


2005 


2006 


2,829 


Pump Station Upgrades (Lincoln Park) 


2003 


2005 


2007 


1,942 


Res Rehab and Seismic Upgrade Summit 


2003 


2005 


2007 


16,190 


Tank Rehab and Seismic Upgrade Lincoln Park 


2003 


2005 


2007 


1,698 


Tank Rehab and Seismic Upgrade Le-Grande 


2003 


2004 


2005 


2,071 


Totai R&R Projects with Construction Starting Before 10/2006 


S29.644 


R&R Projects w/ Construction Starting After 10/2006 










Pump Station Upgrades (Palo Alto) 


2004 


2007 


2008 


51,857 


Pump Station Upgrades (Sky View - Aqua Vista)) 


2004 


2007 


2008 


1,373 


Pump Station Upgrades (Forest Knolls) 


2004 


2007 


2008 


2,466 


Res Rehab and Seismis Upgrade Potrero H 


2004 


2006 


2007 


9,584 


Tank Rehab and Seismic Upgrade Portero Heights 


2004 


2006 


2007 


2,049 


Pump Station Upgrades (Mount Davidson) 


2005 


2008 


2009 


1,618 


Tank Rehab and Seismic Upgrade Forest Knolls 


2005 


2006 


2008 


1,810 


Vehicle Service & Facility Upgrade 


2006 


2008 


2009 


4,177 


North University Mound System Upgrade 


2006 


2008 


2010 


18,351 


Pump Station Upgrades (McLaren Park) 


2006 


2009 


2010 


5,038 


Pump Station Upgrades (Potrero Heights) 


2006 


2008 


2009 


1,764 


Pump Station Upgrades (Forest Hill) 


2006 


2008 


2009 


1,529 


Tank Rehab and Seismic Upgrade Mount Davidson 


2006 


2008 


2009 


1,705 


Tank Rehab and Seismic Upgrade Forest Hill 


2006 


2008 


2009 


2,270 


Tank Rehab and Seismic Upgrade Hunters Point 


2006 


2007 


2009 


3,459 


Res Rehab and Seismic Upgrade Hunters Point 


2006 


2008 


2009 


5,832 


Reservoir Rehabilitation Stanford Heights 


2006 


2007 


2009 


9.519 


Total R&R Projects w/ Construction Starting After 10/2006 


$74,401 


R&R Projects Starting After 10/2006 










Pump Station Upgrades (LeGrande) 


2006 


2009 


2010 


52,332 


Pump Station Upgrades (Vista Francisco) 


2006 


2009 


2010 


1,611 


Tank Rehab and Seismic Upgrade McLaren *1 


2006 


2009 


2010 


6,899 


Tank Rehab and Seismic Upgrade McLaren *2 


2006 


2009 


2010 


6,854 


Fulton @ 5tn Ave 30' Main Replacement 


2007 


2009 


2011 


3,578 


Res Rehab and Seismic Upgrade Sutro 


2009 


2010 


2012 


:2.407 


Total R&R Projects Starting After 10/2006 


$43,681 


Total 2003 5 Project Costs 








5417.854 


Total Escaiated Project Costs 








££03.668 


~ot£j 3onc 3i=a including contingency and financing costs, 








5":4.938 



Attachment V 
Fage 'I of 2 



San Francisco Public Utilities Commission - Capital Improvement Program 
Local Share of Regional Water Projects 











SFPOC 




Start 
Project 


Construction 
Start 


In Service 
Date 


Proposal 


Project Title 


Cost 2003 $ 


Non-RJkR Projects 










- Alameda Oeek-Fishery Enhancement— 


-20G3- 


-2004 


200-7 


- - - $2,110 - 


Calaveras Dam Replacement 


2003 


2006 


2009 


47,025 


Crystal Springs Bypass Tunnel 


2003 


2007 


2009 


15,513 


Irvington Tunnel Alternatives 


2003 


2006 


2009 


4S.122 


Pipeline Repair Plan & Readiness Imp 


2003 


2003 


2004 


1,056 


Enlarge Sunol Treatment Capacity to 240 mgd 


2004 


2007 


2009 


25,699 


SJPL No4 New 


2004 


2009 


2011 


122,698 


Hetch Hetchy Advanced Disinfection - UV 


2006 


2010 


2011 


15,877 


Bay Division Pipeline - Hydraulic Capacity Upgrade 


2006 


2010 


2013 


78,052 


BDPL Nos 3 & 4 Cross Connections 


2006 


2009 


2010 


3,440 


Lawrence Uvermore Filtration 


2008 


2010 


2011 


565 


Standby Power Facilities.Various Locations 


2010 


2012 


2013 


1,724 


Installation of SCADA System (Ptiase II) 


2010 


2013 


2014 


9,002 


San Andreas #3 P/L Installation 


2010 


2013 


2014 


7,940 


Sunol Quarry Reservoirs 


2011 


2013 


2014 


2,790 


Water System Automation (Hetch Hetchy) 


2012 


2014 


2015 


406 


Total Non-R&R Projects 


$379,018 


R&R Projects with Construction Starting Before 10/2006 










SVWTP - New Treated Water Reservoir 


2003 


2006 


2007 


$14,728 


San Antonio Pump Station / Emergency Power 


2003 


2005 


2005 


1,155 


Tesla Portal Disinfection Facility 


2004 


2006 


2008 


3,296 


HTWTP Short Term Improvements - Phase A 


2004 
906 


2006 


2007 


939 


Total R&R Projects with Construction Starting Before 10/2i 


$20,119 


R&R Projects with Construction Starting After 10/2006 










Seismic Upgrade Of BDPL's ©Hayward Fault 


2006 


2009 


2010 


$13,168 


Adit Leak Repairs(Crystal Springs/ Calaveras Res) 


2006 


2007 


2007 


688 


Crystal Springs PS and CS-SA PL Capacity 


2006 
)6 


2009 


2011 


18,236 


Total RiR Projects with Construction Starting After 10/20< 


$32,092 


R&R Projects Starting After 10/2006 










BDPL *1 & #2 Repair of Caisson & Pipe Bridge 


2007 


2011 


2013 


$5,928 


U. Mound Rsvr - Seismic Upgrade/Rehab (North Basin) 


2007 


2010 


2011 


20,225 


HTWTP Short Term Improvements Phase B 


2008 


2011 


2012 


3,159 


Lower Crystal Springs Dam Improvements 


2009 


2012 


2014 


5,295 


Sunset Rsvr - Seismic Upgrade/Rehab (North Basin) 


2009 


2012 


2014 


14,062 


HTWTP Long-Term Improvements 


2011 


2014 


2016 


11,722 


Cross Connection Controls 


2012 


2014 


2015 


1,221 


Early Intake Res-Resurface Dam (Hetch Hetcty) 


2012 


2014 


2015 


397 


Early Intake Res-Spillway +Adj. Weir( Hetch Hetchy) 


2012 


2014 


2015 


510 


Pulgas Reservoir Rehabilitation 


2012 


2015 


2016 


4,946 


Capuchino Valve Lot capacity Improvements 


2012 


2015 


2016 


521 


fountain Tunnel Lining (Hetch Hetchy) 


2012 


2014 


2015 


770 


Crystal Springs 2 PL Replacement (In City) 


2012 


2013 


2015 


18,496 


Foothill Tunnel Repairs (Hetch Hetchy) 


2012 


2014 


2015 


957 


Total R&R Projects Starting After 10/2006 


$88,208] 


Total 2003 $ Project Costs 








$SI9,437J 


Total Escalated Project Costs 








$643,336J 


Tctsi Bond Sizs ,'inciuding contigency and financing costs) 








S913,154| 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

Item 3 -File 02-1136 

Note: This item was continued by the Finance Committee at its meeting of July 10, 
2002. 



Department: 
Item: 



Services to be 
Performed: 

Description: 



Comments: 



Department of Administrative Services (DAS) 

Resolution concurring with the Controller's certification 
that Convention Facilities management, operation and 
maintenance services can be practically performed at the 
Bill Graham Civic Auditorium and the Moscone Center by 
a private contractor for a lower cost than similar work 
services p erjmmed_by_ CJjy_andjCounty pmploy pp.fi. 



Convention facilities management, operation and 
maintenance 

Charter Section 10.104 provides that the City may 
contract with private firms for services which had been 
performed by City employees if the Controller certifies, 
and the Board of Supervisors concurs, that such services 
can in fact be performed by private firms at a lower cost 
than similar work services performed by City employees. 

The Controller has determined that contracting for 
convention facilities management, operations and 
maintenance services at the Bill Graham Civic 
Auditorium and Moscone Center for FY 2002-2003 would 
result in the estimated savings as follows: 





Lowest 


Highest 




Salary 


Salary 


Citv Operated Service Costs 


Step 


Step 


Salaries 


$9,344,185 


$10,962,307 


Fringe Benefits 


2.374.657 


2.580.342 


Total 


11,718,842 


13,542,649 


Contractual Services Costs 


10.878.071 


10.878.071 


Estimated Savings 


S840.771 


S2.664.57S 



1. Under an outside contract, the Moscone Joint Venture, 
consisting of SMG and Thigpen Limited. Inc.. manages, 
operates and maintains the Bill Graham Civic 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

45 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



Auditorium and Moscone Center. Specifically, the 
Moscone Joint Venture's responsibilities include: (1) 
contracting with others for their use of the convention 
facilities; (2) promoting the use of the convention 
facilities; (3) conducting event management activities; and 
(4) maintaining the convention facilities and the 
equipment therein. 

2. Convention facilities management, operation and 
maintenance services at the Bill Graham Civic 
Auditorium and Moscone Center were first certified as 
required by Charter Section 10.104 in FY 1982-1983 and 
have been contracted out continuously since then. 
According to Mr. John Noguchi of the Department of 
Administrative Services' Office of Convention Facilities 
Management, SMG, the private facility management 
company charged with operating the City's convention 
facilities, has been the contractor for these services since 
the Moscone Center opened in 1981. In 1993, SMG 
partnered with Thigpen Limited Inc., a minority business 
enterprise, creating the Moscone Joint Venture. 

3. Mr. Noguchi reports that the Department awarded a 
five-year contract for the provision of convention facilities 
management, operations and maintenance services at the 
Bill Graham Civic Auditorium and Moscone Center to 
Moscone Joint Venture, effective July 1, 1999. The 
proposed resolution would approve the Controller's 
certification for the fourth fiscal year of the five-year 
contract, from July 1, 2002 to June 30, 2003. The 
proposed resolution, therefore, should be made retroactive 
to July 1, 2002. 

4. The Contractual Services Cost used for the purpose of 
this analysis is the Moscone Joint Venture's projected FY 
2002-2003 costs to provide convention facilities 
management, operation and maintenance services. 

5. The Contractual Services Cost of $10,878,071 for FY 
2002-2003 is $949,310 or 8.0 percent less than the FY 
2001-2002 cost of $11,827,381. Attachment I to this report 
is a memorandum from Mr. Noguchi explaining the 
reasons for the decrease in the contractual services costs. 



BOARD OF SUPERVISORS 

3 JDG2T ANALYST 
46 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

6. The Controller's supplemental questionnaire with the 
Department's responses is included as Attachment II to 
this report. 

Recommendation: 1. Amend the proposed resolution to provide for 

retroactivity, as noted in Comment No. 3. 

2. Approve the proposed resolution, as amended. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



07/02/2002 14:02 FAX 415 974 4073 




MO SCONE CENTER 



DEPARTMENT OF 



Attachment I 



ADMINISTRATIVE SERVICES 



WILLIE L. BROWN, JR. 
Mayor 

RYAN L. BROOKS 
Director 



July 2, 2002 



-Matt-Stekes 

Office of the Budget Analyst 
Board of Supervisors 
City & County of San Francisco 
1390 Market Street, Room 1025 
San Francisco, CA 94102 

Re: Convention Facilities Management 
Prop J 2002-2003 

Dear Matt, 

Per your request, following is a brief statement summarizing the decrease in the 
management contractor's labor costs at the Moscone Center and Bill Graham Civic 
Auditorium for fiscal year 2002-2003. 

In a Citywide effort to reduce the budget, Convention Facilities Management committed 
that beginning in fiscal year 2002-2003, costs associated with cleaning the exhibition 
floor would be transferred from the operator to the client. This service had historically 
been provided at no charge to the client. Service contractors, hired by the client to set up 
and dismantle shows, now have the added responsibility of cleaning the floor. This new 
arrangement accounts for the majority of the department's cost savings for fiscal year 
2002-2003. 

Please let me know if you have any questions or need further clarification. 

Sincerely, 





Noguchi 
)eputy Director 
Convention Facilities Management 
415-974-4027 



City Hall, Room 362, 1 Dr. Carlton S. Gocdlett Place, San Francisco, CA 341C2-4683 
Telephone (415) 554-6171; Fax (415) 554-6177 

AS 



Attachment II 

CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 

DEPARTMENT: Convention Facilities Management (Administrative Services) 

CONTRACT SERVICES: Operations 

CONTRACT PERIOD: July 1 , 2002 - June 30, 2003 

(1) Who performed the activity/service prior to contracting out? 
City 

(2) How many City employees were laid off as a result of contracting out? 
None 

(3) Explain the disposition of employees if they were not laid off. 
Employees went to work for the contractor. 

(4) What percentage of City employees' time is spent of services to be contracted out? 
0% 

(5) How long have the services been contracted out? Is this likely to be a one-time or an ongoing request for 
contracting out? 

21 Years 

(6) What was the first fiscal year for a Proposition J certification? Has it been certified for each subsequent 
year? 

1982-1983. Yes. 

(7) How will the services meet the goals of your MBE/WBE Action Plan? 
Contractor is a joint venture with a minority principal. 

(8) Does the proposed contractor provide health insurance for its employees? 
Yes 

(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same benefits 
provided to employees with domestic partners? If not, how does the proposed contractor comply with the 
Domestic Partners ordinance? 

Yes. 

(10) Does the proposed contractor pay meet the provisions of the Minimum Ccmoensation Ordinance? 
Yes. 

Department Representative: Jor.n Noguch 
Teiechone Number: 974-4 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



Item 4 - File 02-1185 

Department: 

Item: 



Description: 



Emergency Communications Department (ECD) 

Ordinance amending Section 755 of the San Francisco 
Business and Tax Regulations Code by increasing the 
Emergency Response Fee rates for standard telephone 
access lines from $1.00 to $1.25 per month, for trunk lines 
from $7.50 to $9.38 per month, and for high capacity 
trunk lines from $135 to $168.75 per month. 

The Emergency Response fee is imposed on all eligible 1 
San Francisco telephone service subscribers to pay for 
emergency communication services. The Emergency 
Response Fees are charged to eligible single access line, 
trunk line and high capacity trunk line telephone 
subscribers through bills from telephone companies. 
Trunk lines and high capacity trunk lines are types of 
lines allowing multiple users access to local telephone 
service and therefore access to emergency communication 
services. 

The proposed ordinance would amend the Business and 
Tax Regulations Code relating to the Emergency 
Response Fee assessed on commercial and residential 
telephone service subscribers by increasing the 
Emergency Response Fees for telephone subscribers who 
use standard access lines, trunk lines and high capacity 
trunk lines, commencing on December 1, 2002. The 
proposed ordinance provides that: (a) the fee for each 
eligible standard telephone access line would increase by 
$0.25 from $1.00 to $1.25 per month, or by 25 percent; (b) 
the fee for each eligible trunk line would increase by 
$1.88 from $7.50 to $9.38 per month, or by 25 percent; 
and (c) the fee for each high capacity trunk line would 
increase by $33.75 from $135 to $168.75 per month, or by 
25 percent. 

The Fees charged to telephone subscribers are collected 
by telephone service providers who in turn remit such Fee 



'The Emergency Response Fee is not imposed on "exempt" telephone subscribers. "Exempt" 
subscribers include non-profit hospitals and educational organizations, lifeline customers, 
governmental agencies, the City, and coin-operated telephones. 

Board of Supervisors 
Budget Analyst 
50 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

revenues to the City. All Emergency Response Fee 
revenues are deposited to the Emergency 
Communications 911 Emergency Response Fund. Mr. 
Todd Rydstrom of the Controller's Office reports that as of 
the writing of this report, the unappropriated fund 
balance of the 911 Emergency Response Fund is 
$3,747,510. All Fees expended from the 911 Emergency 
Response Fund are subject to appropriation approval of 
the Board of Supervisors. 

Comments: 1. Emergency Response Fees were last increased by the 

Board of Supervisors in May of 2002 from $5.00 per trunk 
line to $7.50 per trunk line per month and establishing a 
fee of $135 for each high capacity trunk line per month 
(File 02-0193). The fee for standard telephone access 
lines was not increased at that time. The previous 
ordinance approved by the Board of Supervisors also 
provided for the use of Emergency Response Fee revenues 
to pay for operating costs of the Emergency 
Communications Department. Previously Emergency 
Response Fees could only be used to fund capital 
expenditures for the Emergency Communications Center, 
mcludm cr e n ui r> ment and the ^a^ment of debt service on 
bonds issued to fund capital projects. Also, the prior 
ordinance eliminated the sunset provisions related to the 
Fees, by deleting the provision which limited total Fee 
revenues to be collected by the City at $100,000,000, 
thereby resulting in an unlimited amount of Fee revenues 
which can be realized by the City in accordance with the 
proposed authorized Fee levels. 

2. Mr. Rydstrom states that as of July 3, 2002, the 
Controller's Office projects Emergency Response Fee 
revenues of $14,658,488 for FY 2001-2002. Mr. Rydstrom 
further states that the Emergency Communications 
Department's proposed FY 2002-2003 budget includes 
estimated Emergency Response Fee revenues of 
$15,500,000 for FY 2002-2003, based on the existing fee 
levels. 

3. Mr. Rydstrom advises that under this proposed 
ordinance, the Controller's Office projects Emergency 
Response Fee revenues of $17,521,250 for FY 2002-2003. 

Board of Supervisors 
Budget Analyst 

51 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



based on the proposed fee increases becoming effective as 
of December 1, 2002, or seven months of collection in FY 
2002-2003 at the increased fee levels, resulting in 
additional revenue of $2,021,250 over the $15,500,000 in 
projected fee revenues to be collected under the existing 
Fees. The Budget Analyst concurs with the Controller's 
projections. 

4. Ms. Julia Friedlander of the City Attorney's Office 
reports that the City can only collect fees equal to the 
costs for providing emergency communication services for 
the telephone subscribers who pay the fee. Therefore, the 
City's General Fund must cover the costs for emergency 
communication services for telephone users who are 
exempt from paying the Fee such as governmental 
agencies. As shown in the Attachment, provided by ECD, 
exempt users account for an estimated 17 percent of the 
telephone lines throughout San Francisco, which means 
the City's General Fund must provide at least 17 percent 
of the City's costs to provide emergency communications 
services. Mr. Rydstrom reports that the City's total 
estimated costs to provide emergency communications 
services for FY 2002-2003 is $30,997,163. Under the 
existing Fees, if the proposed ordinance were not 
approved, the General Fund would pay for an estimated 
$15,497,163 or 50.0 percent of such costs and the 
Emergency Response Fees would pay for an estimated 
$15,500,000 or 50.0 percent of the total FY 2002-2003 
emergency communication services costs. 

5. As noted above, the total estimated costs to provide 
emergency communications services for FY 2002-2003 is 
$30,997,163. Of that amount, Mr. Rydstrom further 
reports that, if this ordinance is approved, the General 
Fund would pay for an estimated $13,475,913 or 43.5 
percent of such costs and the Emergency Response Fees 
would pay for an estimated $17,521,250 or 56.5 percent of 
the total FY 2002-2003 emergency communication 
services costs, based on an effective start date of 
December 1, 2002 for the proposed fee increases. Mr. 
Rydstrom further notes that on an annualized basis, the 
Controller's Office projects Emergency Response Fee 
revenues of $18,965,000. Therefore, on an annualized 

Board of Supervisors 
Budget Analyst 

52 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

basis, the General Fund would pay for an estimated 
$12,032,163 or 38.8 percent and the Emergency Response 
Fees would pay for an estimated $18,965,000 or 61.2 
percent of the total FY 2002-2003 emergency 
communication services costs. 

Recommendation: Approval of the proposed ordinance is a policy matter for 

the Board of Supervisors. 



Board of Supervisors 
Budget Analyst 
52 



Emergency Communications Department Attachment 

911 Fee 
Exempt and Non-Exempt Telecom Lines 









Total Line 


Number of lines subject to fee 


Qty 


# Lines 


Equivalent 


# of access lines 


570,857 


1.00 


570,857 


# of trunks 


24,743 


7.50 


185,573 


# of super trunks 


480 


135.00 


64,800 


# wireless (2) 


333,610 


1.00 


333,610 


Subtotal 






1,154,840 


Number of exempt lines 








# of lifeline customers 


95,573 


1.00 


95,573 


# of access lines 


67,348 


1.00 


67,348 


# of trunks 


7,796 


7.50 


58,470 


# of super trunks 


84 


135.00 


11,340 


# wireless 


4,093 


1.00 


4,093 


Subtotal 






236,824 



Total (3) 1,391,664 

Percent subject to fee 83.0% 

Percent exempt 17.0% 

(1) Based on sample from largest remitters in October 2001 and March 2002 
representing approximately 85% of total fee revenues. 

(2) Source: Mayor's Office, Oct 2001 . 

(3) Does not include 31 ,000 accounts with services presumed not to meet the 
definition of local telephone service. 



JeptVbudgeftECD budgetsVECD budgeted fee :ac bell2.xls 7/11/02 Source: EC! 

- - - - - - " 54 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

Item 5 - File 02-1049 



Department: 

Item: 

Location: 
Purpose of Lease: 

Lessor: 

Lessee: 

No. of Sq. Ft. and 
Cost Per Month: 



Annual Rental 
Payment: 



Department of Public Health (DPH) 
Department of Administrative Services, 
Division (RED) 



Real Estate 



Utilities: 



Resolution authorizing a new lease of real property at 124 
Turk Street on behalf of the Department of Public Health. 

Camelot Hotel located at 124 Turk Street. 

To provide 55 single-room occupancy (SRO) residential 
units to persons participating in DPH's Direct Access to 
Housing Program (see Description Section below). 

124 Turk Street, L.P. 

City and County of San Francisco, on behalf of DPH 



Approximately 14,700 square feet at a monthly rental rate 
of $27,500 (approximately $1.87 per square foot per month). 
The 14,700 square feet of space includes (a) 1,876 square 
feet on the basement floor for laundry facilities and storage, 
(b) 2,431 square feet on the first floor for office space for the 
property manager and support services provider, 
community rooms, a tenant lounge, and a kitchen, and (c) 
10,393 square feet on floors two through six for 55 SRO 
units. According to Mr. Marc Trotz of DPH, the average size 
of each unit is 110 square feet. Other square footage on 
floors two through six is made up of common areas 
including hallways and restrooms. The building has a total 
of six floors plus a basement. 



$330,000. On each anniversary of the lease commencement 
date, the rental rate would increase by the percentage 
increase in the Consumer Price Index (CPI) for the San 
Francisco Metropolitan Area, provided that the percentage 
increase shall not be less than 1.5 percent nor more than 5 
percent. 

To be provided by the City at an estimated cost of 
approximately $4,583 per month ($55,000 per year). Such 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

55 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



utility costs include gas, electric, water, and sewer charges 
including garbage collection. 



Janitorial Services: 



Total Annual Cost: 



Term of Lease: 



Right of Renewal: 



To be provided by the City at an estimated cost of 
approximately $1,843 per month ($22,120 per year 
including $21,120 for janitorial personnel and $1,000 for 
janitorial supplies). 

Utilities and janitorial services would be provided under a 
property management contract with the John Stewart 
Company at a total cost of $329,342 including $55,000 in 
utilities and $22,120 in janitorial services (see Comment 
No. 2). In addition, support services for residents of the 
Direct Access to Housing Program at the Camelot Hotel 
would be provided by Baker Places, Inc. at an annual cost 
of $325,000 (see Comment No. 3). 

$956,842 in FY 2002-03, including 11 months of rent for the 
period of August 1, 2002 through June 30, 2003, and 12 
months of property management and support services. As 
explained by Mr. Trotz in Attachment I, the contractual 
costs for property management and support services in FY 
2002-03 are for 12 months, even though DPH will only pay 
11 months of rent, because the contractors will need to hire 
and train staff one month prior to the commencement of the 
proposed lease. On an annual basis, the costs for rent, 
property management and support services would be 
$984,342 excluding CPI adjustments. 



Expenditure Item 


Estimated 

Cost in 
FY 2002-03 


Rent ($27,500 per month for 11 months) $302,500 


Property Management including Janitorial 
Services and Utilities (see Comment 
No. 2) 


329,342 


Support Services (see Comment No. 3) 


325.000 


Total 


$956,842 



10 years, anticipated to commence on August 1, 2002 and 
expire on July 31, 2012. 

Option to renew for two additional 10-year terms. The 
provisions noted in the Annual Rental Pavment Section 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

56 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



above would apply during the two 10-year lease extension 
terms. 



Tenant 
Improvements: 



$180,500 - See Comment No. 1 below. 



Source of Funds in 

FY 2002-03: According to Mr. Trotz, DPH's FY 2002-03 budget contains 

funding for the above listed annual costs, or $956,842, from 

the sources in the following table: 



Sources of Funds in FY 2002-03 


Amount 


^ IT-IT 




General r una 


$201,965 


AB2034 1 


451,597 


Comprehensive AIDS Resources 
Emergency Act (CARE) 


60,740 


MediCal 


39,260 


Rental Income from the SRO units 


203.280 


Total 


$956,842 



Right of 
First Refusal: 



The Comprehensive AIDS Resources Emergency Act 
(CARE) is a Federal program. The Act provides funds to 
increase the availability of primary health care and support 
services, including housing, in order to reduce utilization of 
more costly inpatient care, increase access to care for 
under-served populations, and improve the quality of life 
for those affected by the AIDS epidemic. 

The rental income of $203,280 for FY 2002-03 is based on 
monthly payments of approximately $350 2 per unit for 55 
units with a 4 percent vacancy rate, totaling $18,480 per 
month or $203,280 for the 11 month period of August 1, 
2002 through June 30, 2003. 



The City has the first right of refusal to purchase the 
Camelot Hotel in the event that the Lessor decides to sell. 



Description: 



The proposed resolution would authorize the DPH to enter 
into a 10 year lease for 14,700 square feet of space at the 
Camelot Hotel at 124 Turk Street. According to Mr. Trotz. 



; AJB2034 is a continuing grant to the DPH from the State Department of Mental Health. 
- Residents of the Camelot Hotel would make monthly payments of approximately 50 percent of their 
income. According to Ms. Daisy Leyva of DPH, monthly payments are anticipated to range from SI 70 
to $415 Der resident per month, at an average of S350 per resident Der month. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 
57 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



the Camelot Hotel is currently undergoing a complete 
renovation as a result of damage sustained from the 1989 
Loma Prieta earthquake. The DPH would sublease 55 
single-room residential units to individuals eligible for 
assistance from DPH's Direct Access to Housing Program. 
This program is designed to secure affordable, community- 
based housing for homeless and extremely low-income San 
Francisco residents. The City subleases residential units to 
persons who fall into one or more of the following 
categories: 

(1) Are medically frail. 

(2) Are - homeless or at risk of homelessness. 



(3) Have recently exited a homeless shelter, residential 
treatment program, jail, hospital, or other institution 
and at risk of homelessness. 

(4) Are capable of living independently with on-site 
support services. 

According to Mr. Trotz, the Camelot Hotel would be the 
sixth residential hotel to be leased by the City for the 
Direct Access to Housing Program. The first was the Pacific 
Bay Inn (75 units) located at 520 Jones Street; the second 
was the the Windsor Hotel (94 units) located at 238 Eddy 
Street; the third was the Hotel Le Nain (96 units) located 
at 730 Eddy Street; the fourth was the Broderick Street 
Guest House (34 units) located at 1421 Broderick Street; 
and the fifth was the Star Hotel (50 units) located at 2176- 
2180 Mission Street. Attachment II, provided by DPH, is a 
comparison of services and costs for the six Direct Access to 
Housing residential hotels. 

Comments: 1. The following table is a summary of $317,091 start-up 

costs for the Camelot Hotel to be paid for with General 
Fund monies appropriated by the Board of Supervisors in 
DPH's FY 2001-02 budget and carried forward to FY 2002- 
03. Attachment I contains additional details on the start-up 
costs. According to Mr. Trotz, no funds for these start-up 
costs, including capital improvement costs, will be paid to 
the property management contractor the John Stewart 
Company, or the building owner, prior to Board of 
Supervisors approval of the proposed lease. According to 
Mr. Trotz, such start-up costs were included in DPH's FY 
2001-02 budget because the DPH had anticipated that the 
Board of Supervisors would consider the proposed lease in 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
58 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



FY 2001-02. According to Ms. Leyva, submission of the 
proposed resolution for this lease agreement was delayed 
until the building renovations were close to completion. 

Start-up costs of $109,091 detailed below, which exclude 
the $180,500 budgeted for capital improvements and the 
$27,500 for the security deposit, are for contractual project 
management services to be provided by the selected 
property management contractor, the John Stewart 
Company. Mr. Trotz advises that these start-up costs are 
one-time expenses over and above the John Stewart 
Company contractual costs of $329,342 annually. 



Start-up Costs 




Expenditure Item 


Estimated 
Cost 


Camelot Hotel Capital Improvements 


$180,500 


Personnel Costs 


5,310 


Security Deposit (one month rent) 


27,500 


Advertising 


1,500 


Office Supplies 


500 


Management Fee 


15,000 


Mileage/Travel 


500 


Seminar and Training 


500 


Office Furniture 


20,000 


Residential Floor Furniture 


15,000 


Kitchen Appliances 


5,000 


Computers, Printers and Supplies 


15,000 


Operating and Maintenance Reserve 


30.781 


TOTAL START-UP COSTS 


S3 17,0 91 



According to Mr. Trotz, the first floor capital improvements 
are estimated to cost a total of $300,000 for the build out of 
office space, community rooms, a tenant lounge and a 
kitchen, resulting in a cost of $123.41 per square foot, for 
2,431 square feet. Although, according to Mr. Trotz, the 
lessor is responsible for $150,000 of the $300,000 in 
estimated costs, there is no provision in the lease which 
requires any payment for capital improvements by the 
lessor. Therefore, the Budget Analyst recommends that the 
proposed resolution be amended to state that approval of 
the resolution is contingent upon an amendment to the 
lease agreement requiring that the first floor capital 
improvement costs cannot exceed $300,000, of which the 
lessor is required to pay 50 percent of such costs. 
BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



Additional capital improvements to install mailboxes, an 
intercom system, and security cameras at an estimated cost 
of $30,500 are to be paid for by the DPH. 

2. Mr. Trotz reports that DPH issued a Request for 
Qualifications (RFQ) in October of 2000 for property 
management and support services for the Camelot Hotel 
and the Star Hotel. As explained in Attachment III, 
provided by DPH, "The providers were selected with the 
expectation that the building will be completed and 
operational in fiscal year 2001-2002." The lease of the Star 
Hotel was approved by the Board of Supervisors on May 21, 
2001 (File 01-0738). As previously noted, submission of the 



proposed resolution for the lease of the Camelot Hotel was 
delayed until the building renovations were close to 
completion. Mr. Trotz further reports that only the John 
Stewart Company responded to the RFQ to provide 
property management services and only Baker Places Inc. 3 , 
a nonprofit organization, responded to the RFQ to provide 
support services at the Camelot Hotel and the Star Hotel. 
According to Mr. Trotz, the same RFQ was sent for both 
property management and support services because both 
services are related to the same sites, the Camelot Hotel 
and the Star Hotel. The RFQ was sent to over 300 
individuals representing over 100 organizations, according 
to Mr. Trotz. 

According to Mr. Trotz, $329,342 in estimated annual 
property management services would be paid to the John 
Stewart Company for the costs shown in Attachment IV, 
provided by DPH. 

3. According to Mr. Trotz, Baker Places Inc. would provide 
on-site support services for mental health, substance abuse, 
HIV/AIDS counseling, vocational and case management 
services, at an estimated annual cost of $325,000. The 
budget for support services, estimated to total $325,000, is 
shown in Attachment V, provided by DPH. 

4. For Years One through Five of the proposed lease term, 
DPH would be responsible for the cost of maintenance and 
repair of major systems including the elevator, the heating, 



3 Baker Places Inc.'s application included the Tenderloin AIDS Resource Center and the Lutheran 
Social Services as subcontractors. 

BOARD OF SUPERVISORS 

3UDGZ.T ANALYST 
60 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

ventilation, air conditioning, electrical, and the plumbing 
system, all of which are new. According to the provisions of 
the proposed lease, the lessor would be solely responsible 
for the replacement of such major systems during Years 
One through Five unless the replacement is necessitated by 
the gross negligence, willful misconduct or intentional 
vandalism by the building's tenants. In the attached 
memorandum (Attachment I), Mr. Trotz explains that the 
"building is undergoing a complete rebuilding and all of the 
systems are new and have warranties. It is very unlikely 
that any of the major systems will need significant repair 
in the first five years of building operation." 

Beginning in Year Six of the proposed lease term, if such 
maintenance costs exceed $5,000 per maintenance incident, 
and the maintenance incident did not result from DPH or 
subtenant negligence, misconduct, or vandalism, the lessor 
would be responsible to pay for maintenance costs in excess 
of $5,000 per incident. If the maintenance costs are $5,000 
per maintenance incident or less, the City would be 
responsible for paying such costs. Such maintenance costs 
are included in the "Operating and Maintenance Reserve" 
budget in the Start-up Costs table shown above. 

Also beginning in Year Six of the proposed lease term, if 
during any one year the City's annual maintenance and 
repair costs exceeds $10,000 and the necessary 
maintenance or repairs did not result from DPH or 
subtenant negligence, misconduct or vandalism, DPH may 
submit to the lessor a written request that the lessor pay 
the amount in excess of the $10,000 annual cap. 4 

5. Ms. Jean Medlar of the Real Estate Division reports that 
the proposed rental rate of $1.87 per square foot represents 
fair market value. 

Recommendations: 1. Amend the proposed resolution to state that approval of 
the resolution is contingent upon an amendment to the 
lease agreement requiring that the first floor capital 
improvement costs cannot exceed $300,000, of which the 
lessor is required to pay 50 percent of such costs. 



4 According to Mr. Trotz. failure of the lessor to make necessary repairs in excess of the annual cap of 
$10,000 beginning m Year Six would be considered a breach of contract and DPH would deduct that 
amount from its rent oayment or pursue a legal remedv. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 
61 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



2. Subject to the amendment as recommended above, 
approve the proposed resolution. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

62 



JUL-10-2002 WED 03:04 PM 



Page 1 or 2 



City and County of San Francisco 
Department of Public Health 




Housing and Urban Health 

101 Grove Street, Room 323 

San Francisco, California 94102 

Phone: (415) 554-2565 

Fax: (415) 554-2658 



MEMORANDUM 



DATE: July 8, 2002 

TO: Anna LaForte 

FROM: Marc Trotz, Director, Housing and Urban Health 

SUBJECT: Camelot Lease 



This memo includes the additional information you requested regarding the Camelot Hotel 
project. 

Start-up Costs: The funds desijmated for building start-up have been have included in the 
Department's FY 01-02 contract with John Stewart Company. This contract includes 
funding for negotiated building improvements and other start-up expenses related to 
building readiness. These funds are currently being held by John Stewart Company and 
have not been paid out to the building owner. The building owner and John Stewart 
Company are fully aware that funds budgeted for building improvements and other 
expenses related to building readiness have been committed in contract but will not be paid 
out until the lease resolution has been approved by the Board of Supervisors and the Mayor. 
Attachment A includes a breakdown of the start-up budget. 

Lease Provision Regarding Major System: All of our master leases include a 
provision that the owner of the building is responsible for certain costs related to 
the envelope of the building and major systems. In the Camelot lease, the 
provision regarding owner's responsibility for repair of major systems does not 
take effect until the sixth year of the lease. This provision was agreed to by the 
DPH and the Department of Real Estate based on the fact that the building is 
undergoing a complete rebuilding and all of the systems are new and have 
warranties. It is very unlikely that any of the major systems will need significant 
repair in the first five years of building operation. 

Breakdown of 02-03 Revenues and Expenses: (see attachment B) The contracts for 
property management and support services for fiscal year 02-03 are 12 month contracts 
because hiring and training will be conducted during the first month of the fiscal year. 

Comparison With Other Master Leased Sites: (see attachment C) 



63 



JUl-09-2002 TUE 09:45 



Page 2 cf 2 



rliliiliii 

Budget Item 






[E x planation 




Personnel 



Staff involved in planning, hiring, processing 
applications, and start-up activities. 



Sec urity De po sit 
Adm inistrative Expe nses 



lOne month security deposit 



$5,310 



$27,500 



Advertising: 



Expense for job advertisement for front desk 
clerks, janitors, assistant maintenance, and 
resident assistants. 



Office Supplies, 



Supplies for start-up, hiring, orientation, and 
training process. 



$1,500 
$500 



Management Fee 



Milage/Travel 



Management fee for work related to start-up 
activities, including weekly planning 
meetings, managing purchase of equipment 
and furniture, managing installation of start- 
up equipment 



$15,000 



Travel expense for purchasing materials, 
attending meetings, training, etc. 



$500 



Seminar and Training 



Capital and Equipment 



Office Space Build - Out 



Mailboxes 



Security Cameras 



Training expense for new staff J 



$500 



Includes build out of 6 staff offices, one 

conference room, 2 bathrooms, community 

kitchen including appliances, installation of 

mailboxes, build out of reception area, 

including counters and cabinets. 



Individual mailboxes for tenants 



Installation of 16 cameras in staff offices and 

five floors to ensure monitoring and security 

of building 



Intercom System 



Office Furniture 



Kitchen/Commun ity Space Appliances 



An intercom will be installed in each 

residential unit and office to allow front desk 

to call tenants if they have visitors and for 

staff to be able to communicate to tenants if 

needed through their offices 



$150,000 



$2,500 



Includes all desks, chairs, filing cabinets, 
computer desks, lamps, for offices 



$20,000 



$8,000 



Dishwasher and chairs and tables for tenant 
use in the community area Also includes 2 
chairs, sofa, television set and DVD player. 



Residential Floor Furniture! 



'Includes bed, side table, chair, lamps, linens, 
bathrobe, glass, trash bin, slippers, toiletry 
kits, and towels. 



Computers, prin ters, and supplies! 



Computers for staff use 



Operating anC Maintenance Reserve! Reserve amount for unforseen expenses. 



$20,000 



$5,000 



$15,000 
$15,000 



$30,781 



■^>r^s#}2mm)Mm 



64 



juL-n-^uu^ ihu 11:11 an 



City and County of San Francisco 
Department of Public Health 




Housing and Urban Health 

101 Grove Street, Room 323 

San Francisco, California 94102 

Phone: (415) 554-2565 

Fax: (415) 554-2658 



DATE: 
TO: 
FROM: 
SUBJECT: 



MEMORANDUM 



July 11, 2002 

Anna LaForte 

Marc Trotz, Director, Housing and Urban Health 

Camelot Lease 



M-i 



This memo includes the additional information you requested regarding the Camelot Hotel 
project. 

• Average square footage per unit: 110 square feet. 

• Square footage of first floor office spaces, community area, kitchen, reception, and 
visitor's lounge: 2,431 square feet. 

• Of the capital improvements budgeted at $180,500, only 5150,000 will be paid to the 
building owner to cover expenses for the build out of office spaces, community area, 
kitchen, reception and visitor's lounge. The remaining $30,500 will be paid out 
directly by John Stewart Company to vendors that will supply the mailboxes and 
supply and install the intercom and security system. The owner of the building has 
no direct participation in the selection or negotiations with the vendors for 
mailboxes, intercom, and security system. 

• DPH is using the RFQ conducted in October 2000 for services to the Camelot Hotel 
because that RFQ was specifically intended for support services and property 
management at Camelot, Star, and Broderick RCF. The providers were selected with 
the expectation that the building will be completed and operational in fiscal year 
2001-2002. 



66 



ATTACHMENT B2 




Administrator- is the lead property management staff and 
supervises all property management staff in the building. 

Asst. Administrator-assists the Administrator In the day-to- 
day operations of the building. 

Front Desk Staff - performs front desk functions including 
meeting and registerting guests, answering tho phone, 
receiving mail, and other clerical tasks. 



0.50 
0.50 



4.20 



AMOUNT 



524,000 
514,700 

588,704 



Maintenance Supervisor- will oversee all maintenance 
needs for Windsor, Star and Camelot hotels and will 
supervise assistant maintenance staff and supervisors. 

Assist. Maintenance Worker- assists the Maintenance 
Supervisor in repairs and maintenance functions. 

Janitor-responsible for day-to-day upkeep of the building. 

Resident Assistants-responsible for assisting Front Desk 
clerk and residents at designated hours. 

Total Salanes 
Fringe Benefits) 
TOTAL PERSONNEL 



0.33 

0.50 
1.00 

1.00 
8.03 



514,000 

512,467 
$21,120 

$21,120 

$196,111 

532,051 
$228,162 



Administrative Expenses 
Advertising 
Credit Reports 
Office Supplies 
Management Fee 

Telephone 

Computer Charges 

Utilities 

Gas and Electricity 

Water 

Garbage Collection/Sewer 

Services Expanses 
Tenant Activities 

Repair* and Maintenance 

Maintenance Supplies 
Janttonai Supplies 



5500 

$1,500 

52,000 

531,680 

$5,000 
$1,000 

528,000 
$15,000 
512,000 

$1,500 

52,000 

S1.000 

S101.180 



67 



JUL. UU L.UVJL. HUM II 'JU nil 



CAMELOT HOTEL 

Contract Year 2002-2003 



ATTACHMENT B3 




Expenditure Item 



Support Services Manager 

Intensive Case Managers 

Case Coordinator 

Case Manager for HIV Services 

Peer Advocate for HIV Services 

Money Manager 

Client Activities and Supplies 



FTE 



1.0 

2.0 
1.0 
0.5 
1.0 
0.5 



Cost 



50,000 
90,000 
40,000 
23,000 
37,000 
25,000 
60,000 



TOTAL 



6.0 



325,000 



66 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

Items 6 & 7 - Files 02-1121 & 02-1097 

Department: Department of the Treasurer/Tax Collector 

Items: File 02-1121: 

Motion submitting the San Francisco Business Tax 
Reform Ordinance of 2002 to the qualified electors of the 
City and County of San Francisco, at the November 5, 
2002 general municipal election. 

File 02-1097: 

Ordinance amending the Business and Tax Regulations 



Code to: (1) enact a new Article 12-A-l (Gross Receipts 
Tax Ordinance) to impose a gross receipts tax on persons 
engaging in specified business activities in San Francisco; 
(2) amend Article 12-A (Payroll Expense Tax Ordinance) 
to (i) reduce businesses' taxable payroll expense by the 
amount of payroll expense attributable to their San 
Francisco business activities taxed under Article 12-A-l 
(Gross Receipts Tax Ordinance), (ii) conform Article 12-A 
(Payroll Expense Tax Ordinance) with the enactment of 
Article 12-A-l (Gross Receipts Tax Ordinance) and 
amendments to Article 6 (Common Administrative 
Provisions), (iii) repeal the Enterprise Zone Tax Credit set 
forth in Section 906A, (iv) repeal the $500 surplus 
business tax revenue credit set forth in Section 906E, and 
(v) consolidate exemptions, definitions and other 
administrative provisions, as amended, that apply to 
Article 12-A (Payroll Expense Tax Ordinance) and other 
Articles of the Business and Tax Regulation Code, and 
place them in Article 6 (Common Administrative 
Provisions); (3) amend Article 12 (Business Registration 
Ordinance) to conform business registration requirements 
with the enactment of Article 12-A-l (Gross Receipts Tax 
Ordinance) and amendments to Article 12-A (Payroll 
Expense Tax Ordinance) and Article 6 (Common 
Administrative Provisions); (4) amend Article 6 (Common 
Administrative Provisions) to (i) clarify common 
administrative provisions and conform them with the 
enactment of Article 12-A-l (Gross Receipts Tax 
Ordinance) and amendments to Article 12-A (Payroll 
Expense Tax Ordinance) and Article 12 (Business 
Registration Ordinance), (ii) consolidate exemptions, 
definitions and other administrative provisions that apply 



BOARD OF SUPERVISORS 
BUDGET ANALYST 
69 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

to Article 12-A (Payroll Expense Tax Ordinance), Article 
12-A-l (Gross Receipts Tax Ordinance), Article 12 
(Business Registration Ordinance) and other Articles of 
the Business and Tax Regulations Code, and (iii) 
eliminate the Board of Review; (5) amend Section 501 of 
Article 7 to clarify the definition of "Permanent 
Residents" exempt from the tax on the transient 
occupancy of hotel rooms, and (6) amend Section 606 of 
Article 9 to repeal the exemptions to the tax and 
surcharge upon the rent charged for the occupancy of 
parking spaces in parking stations (i) which are part of 
residential or hotel premises and (ii) for registered hotel 
guests where the parking station is not located on the 
hotel premises. 

Description: File 02-1121: 

This motion, related to File 02-1097, would authorize the 
submission of the San Francisco Business Tax Reform 
Ordinance to the voters at the November 5, 2002 election. 
The State of California Constitution requires that any 
new, increased or extended general tax be approved by a 
majority vote of the qualified electors. The Finance 
Committee must hear the motion by July 30 th , the Board 
of Supervisors must submit the ordinance to the voters by 
August 5 th , and either (a) the Board of Supervisors, (b) 
four Supervisors, or (c) the Mayor must submit the 
ordinance to the Director of Elections by August 7 th , in 
order that the San Francisco Business Tax Reform 
Ordinance of 2002 be voted on at the November 5, 2002 
election. 

File 02-1097: 



The City and County of San Francisco currently imposes a 
Payroll Tax on firms doing business in San Francisco at 
the rate of 1.5 percent of the firm's payroll expenses. 
Payroll expenses which are taxable include all 
compensation paid to employees for services and 
distributions of salaries to owners of associations and 
partnerships regarding work done in San Francisco. 

The proposed ordinance would: 

• Establish a new Gross Receipts Tax on the gross 
receipts of certain business activities from proceeds 
realized from doing business in San Francisco; 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
70 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



Amend the Payroll Expense Tax Ordinance to clarify- 
that payroll expenses include all compensation to 
owners of partnerships, limited liability partnerships, 
limited liability companies, and other "pass-through 
entities" 1 ; 

Repeal the Enterprise Zone Tax Credit 2 and the 
surplus business tax revenue credit 3 ("Good Times 
Credit"); 

Amend the Tax on Occupancy of Parking Space in 
Parking Stations to eliminate existing tax exemptions 
for hotel parking spaces that are not located on hotel 
premises; and 



• Amend other sections of the Business and Tax 
Regulations Code to clarify language and conform the 
code with the changes proposed. 

The businesses and business activities which would be 
subject to the proposed new Gross Receipts Tax and the 
rates at which those business activities would be taxed 
include: (a) lessors of real estate at 0.3 percent of gross 
receipts; (b) taxicab color scheme permit holders at 0.3 
percent of gross receipts; (c) automobile rental and leasing 
companies at 0.3 percent of gross receipts; (d) gasoline 
stations at 0.3 percent of gross receipts; and (e) 
construction contractors at graduated rates of 0.3 of gross 
receipts of $0 to $2,000,000, 0.35 of gross receipts of 
$2,000,001 to $5,000,000 and 0.4 percent of gross receipts 
over $5,000,000. Presently, these businesses are subject 
to the City's Payroll Tax. When such businesses have 
high gross receipts, it is possible that the Gross Receipts 
Tax liability of the business would be higher than the 
Payroll Tax liability. 



1 The proposed ordinance defines the term "pass-through entity" as: a trust, partnership, corporation, 
limited liability company, hmited liability partnership, professional corporation, and any other 
person or entity which is not subject to the income tax imposed by Subtitle A, Chapter 1 of the 
Internal Revenue Code of 1986, as amended, or which is allowed a deduction in computing such tax 
for distributions to the owners or beneficiaries of such person or entity. 

2 The Enterprise Zone Tax Credit is a credit against taxes for businesses located within the San 
Francisco Enterprise Zone that hire certain "qualified individuals" for newly created jobs. This ten- 
year declining credit is 100% of the tax liability for the first two years of employment, 50% the third 
and fourth years, 25% the fifth and sixth years, 15% the seventh and eighth years, and 10% the 
ninth and tenth years. 

3 Under the surplus business tax revenue credit, or Good Times Credit, businesses receive a S500 tax 
credit for any fiscal year m which Business Tax revenues exceed projections by 7.5 percent. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

71 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

Comments: 1. In April of 2001 the Board of Supervisors approved an 

ordinance which: (a) repealed the Gross Receipts method 
of calculating the Business Tax effective January 1, 2000; 
(b) amended the Business Tax Registration Certificate 
Fee requirements to be consistent with the repeal of the 
Gross Receipts Tax; and (c) refunded gross receipts-based 
taxes for the 2000 tax year which exceeded the amount 
that would have been due to the City in Payroll Taxes 
based on the businesses' payroll expenses (File 01-0274). 
According to Mr. Dorji Roberts of the City Attorney's 
Office the repeal of the gross receipts method of 
calculating the Business Tax was in response to a series 
of lawsuits challenging the City's Business Tax structure. 

2. Mr. Roberts advises that the proposed ordinance would 
clarify the tax treatment of partnership compensation and 
provide that compensation paid to owners of pass-through 
entities, such as partnerships and limited liability 
companies, for services performed in San Francisco, such 
as accounting and legal services for example, qualifies as 
payroll expense of the business entity. Under the 
proposed ordinance, all cash distributions to owners of a 
pass-through entity must be included when the pass- 
through entity determines its taxable payroll expense. 
The proposed ordinance provides that the amount of 
taxable payroll expense is presumed to be 90 percent of 
the gross income of the owner for Federal Income Tax 
purposes. The proposed ordinance provides that the pass- 
through entity, such as a partnership, may challenge the 
90 percent amount by establishing to the satisfaction of 
the Tax Collector that less than 90 percent of the owner's 
gross income is compensation for professional services. 

3. The proposed ordinance also provides that businesses 
engaging in professional sports would pay the Payroll Tax 
based on the percent of payroll expenses which is 
equivalent to the percent of the number of regular season 
games played within the City during the tax year 
compared to the total number of regular season games 
played. Currently businesses engaging in professional 
sports pay the Payroll Tax based on the percent of payroll 
expenses which is equivalent to the percent of the number 
of working hours performed within the City during the 
tax year compared to the total number of hours worked. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

72 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 



4. Ms. Peg Stevenson of the Controller's Office states 
that the Controller's Office estimates that the proposed 
new Gross Receipts Tax for specific business activities 
would result in an estimated $4 million annually in 
additional revenue to the City and that the clarification of 
the tax treatment of partnership compensation payable 
under the Payroll Tax provision would result in an 
estimated $10 million to $15 million annually of 
additional revenue to the City, resulting in total 
additional revenues to the City of between $14 million 
and $19 million annually. The Budget Analyst concurs 
with the Controller's projections. Ms. Stevenson advises 
that the repeal of the Enterprise Tax Credit will result in 
an estimated $35,000 annually in additional revenue and 
that since no credits were given for the Good Times Credit 
for the last three years, no additional revenues to the City 
have been estimated for the repeal of this credit. Ms. 
Stevenson adds that in years when the Good Times Credit 
has been granted, it resulted in foregone Business Tax 
revenues of an estimated $4 million. In addition, Ms. 
Stevenson advises, the New Jobs Tax Credit 4 will sunset 
as of December 31, 2002, resulting in additional 
estimated annual revenues to the City of $15 million to 
$25 million. The termination of the New Jobs Tax Credit 
is not included in the subject proposed ordinance since 
that credit is set to sunset already. 

5. Ms. Shana Margolis of the Department of the 
Treasurer/Tax Collector notes that the proposed 
ordinance would amend the Business Registration 
Ordinance to conform business registration requirements 
with the enactment of the proposed new Gross Receipts 
Tax and with the proposed changes to the Payroll Tax. 
Currently, the Business Tax Registration Certificate Fee 
is based on the Payroll Tax liability. Presently all 
businesses whose Payroll Tax liability is $2,500 or less, 



4 Under the New Jobs Tax Credit businesses that create or relocate new, permanent jobs in San 
Francisco that otherwise would be situated elsewhere are entitled to tax credits against the City 
Payroll Tax liability. This credit applies to most types of businesses with respect to permanent hires, 
regardless of salary, and it applies to each new job created on or after July 1, 1993 at a 100 percent 
tax credit for the first 12 months and a 50 Dercent tax credit for the second 12 months. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 
73 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 

are exempt from paying Payroll Taxes to the City. 
According to Ms. Margolis, currently businesses whose 
calculated Payroll Tax to the City is less than $1 would 
pay the minimum Business Tax Registration Certificate 
Fee of $25 annually. Businesses which owe a Payroll Tax 
liability to the City of $1 to $10,000 would pay $150 
annually, businesses which owe a Payroll Tax liability to 
the City of $10,001 to $50,000 would pay $250 annually, 
and businesses which owe a Payroll Tax liability to the 
City over $50,000 would pay $500 annually. Ms. Margolis 
advises that under the proposed ordinance, businesses 
which would owe a Gross Receipts Tax liability to the City 
of $1 to $10,000 would pay $150 annually, businesses 
which owe a Gross Receipts Tax liability to the City of 
$10,001 to $50,000 would pay $250 annually, and 
businesses which owe a Gross Receipts Tax liability to the 
City over $50,000 would pay $500 annually for the 
Business Tax Registration Certificate Fee. Ms. Stevenson 
reports that the Controller's Office does not have 
estimates for revenues associated with the proposed 
amendments to the Business Tax Registration Certificate 
Fee available at this time. 

6. In summary, the Controller's Office estimates that the 
proposed ordinance would result in $4 million in 
additional Gross Receipts Taxes and between $10 million 
and $15 million in additional Payroll Taxes or total 
additional Business Tax revenues to the City of $14 
million to $19 million annually. In addition, the 
Controller's Office estimates that existing provisions for 
the sunset of the New Jobs Tax Credit will result in 
additional Payroll Tax revenues to the City of $15 million 
to $25 million annually. 

Recommendation: Approval of the proposed ordinance is a policy matter for 

the Board of Supervisors. 



3CALL ~E 5j?3EVZ5C? 

BUDGET ANALYST 
74 



Memo to Finance Committee 

July 17, 2002 Finance Committee Meeting 




cc: Supervisor Peskin 
Supervisor Daly 
President Ammiano 
Clerk of the Board 
Controller 
Ben Rosenfield 
Ted Lakey 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

75 




C*y and County of £an Francisco 

Meeting Minutes 

^Finance Committee 

Members: Supervisors Aaron Peskin and Chris Daly 
Clerk: Gail Johnson 



City Hall 

1 Dr. Carlton B. 

Goodlett Place 

San Francisco, CA 

941024689 



Monday, July 22, 2002 



10:00 AM 
Special Meeting 



City Hall, Room 263 



Members Present: Aaron Peskin, Chris Daly, Tom Ammiano. 



MEETING CONVENED 






The meeting convened at 10:12 a.m. 



DOCUMENTS DEPT. 
JUL 2 3 Z002 

SAN FRANCISCO 
PUBLIC LIBRARY 



City and County of San Francisco 



Printed at 11:34 AM on 7/22/02 



Finance Committee Meeting Minutes July 22, 2002 



020910 [Revenue Bond Election] 
Supervisor Ammiano 

Resolution calling and providing for a special election to be held in the City and County of San Francisco for 
the purpose of submitting to the qualified voters of said City and County on November 5, 2002 a proposition 
for the issuance of revenue bonds and/or other forms of revenue financing by the Public Utilities Commission 
in a principal amount not to exceed $1,628,000,000 to finance the acquisition and construction of 
improvements to the City's water system; making issuance of the bonds subject to the requirement that San 
Francisco Administrative Code Chapter 37 (Residential Rent Stabilization and Arbitration Ordinance) be 
amended to provide that (1) 50% of the costs resulting from increased water rates may be passed through from 
landlords to residential tenants where a unit is in compliance with any applicable laws requiring water 
conservation devices, and (2) tenants may file hardship applications with the Rent Board for relief from all or 
part of the cost passthrough and their affected landlords may utilize any available Public Utilities Commission 
low-income rate discount program or similar program for water bill reduction based on the tenants' hardship 
status; and for the possible imposition of a surcharge on retail water customers; and consolidating said special 
election with the General Municipal Election to be held on November 5, 2002; complying with Section 53410 
of the California Government Code; finding the proposed project is in conformity with the priority policies of 
Planning Code Section 101.1(b) and the City's General Plan. (Public Utilities Commission) 

(Fiscal impact.) 

6/5/02, RECEIVED AND ASSIGNED to Finance Committee. 

6/27/02. SUBSTITUTED. Substituted by the City Attorney 6/28/02. bearing new title. 

6/27/02. ASSIGNED to Finance Committee. 

7/10/02. AMENDED. AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. Heard in Committee. Speakers: Margaret Bruce, 

Silicon Valley Manufacturing Group; Lee Blitch, President. San Francisco Chamber of Commerce; Brook Turner. Coalition for Better 

Housing; Ira Ruskin, Chair, Committee for Regional Water Reliability, John Kennedy. Deputy City Attorney; Ron Good. Chair. Sierra 

Club, Hetch Hetchy Restoration Task Force and Restore Hetch Hetchy; Dennis Oliver. California Alliance for Jobs; A. Sepi Richardson, 

Council Member, City of Brisbane; Leroy McDonald; Alan Gibson. Budget Analyst's Office; Patricia Martel. General Manager. Public 

Utilities Commission; Monique Moyer. Mayor's Office of Public Finance; William Berry. Assistant General Manager for Finance and 

Administration, Public Utilities Commission. 

Continued to 7/17/02. 

7/10/02, CONTINUED. 

7/17/02. AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. Heard in Committee. Speakers: Joe Gurbb. 

Executive Director. Rent Stabilization Board; Harvey Rose, Budget Analyst; William Berry, Assistant General Manager for Finance and 

Administration, Public Utilities Commission; Steve Kawa. Deputy Chief of Staff. Mayor's Office, Female Speaker: Brook Turner, 

Coalition for Better Housing; Janan New. Director. San Francisco Apartment Association; Ron Good. Chair. Sierra Club. Hetch Hetchy 

Restoration Task Force and Executive Director. Restore Hetch Hetchy; Ernestine Weiss; Joan Girardot. Past President. Coalition for San 

Francisco Neighborhoods; John Bardis; Theodore Lakey. Deputy City Attorney; Marie Corlett Blits. Deputy City Attorney. 

Amendment of the Whole bearing new title, as presented by Supervisor Ammiano, adopted. Amended on page 1. line 10. after 

"amended," by deleting "effective no later than January 1. 2003." Further amended on page 2, lines 17 and 18, after "amended," by 

deleting "effective on or before January 1. 2003." 

Continued to a special meeting of the Finance Committee on Monday, July 22. 2002, at 10:00 a.m. 

7/17/02, CONTINUED. 

Heard in Committee. Speakers: Supervisor Sandoval; Patricia Martel, General Manager, Public Utilities 

Commission; Mr. Hess; Ted Lakey, Deputy City Attorney. 

7/22/02 Amendment of the whole bearing same title. 

AMENDED, AN AMENDMENT OF THE WHOLE BEARING SAME TITLE. 

RECOMMENDED AS AMENDED AS A COMMITTEE REPORT by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



ADJOURNMENT 



The meeting adjourned at 10:52 a.m. 



City and County of San Francisco 2 Printed at 11:34 AM on 7/22/02 



[Budget Analyst Report] 
Susan Horn 

10.25 /#^>\ Main Library-Govt. Doc. Section 

7 i 



l*i/t 




CITY AND COUNTY SLhShL/s OF SAN FRANCISCO 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



July 18, 2002 

TO: .Finance Committee DOCUMENTS DEPT. 

FROM: ..Budget Analyst JUL 2 2 Z002 

SUBJECT: July 22, 2002 Special Finance Committee Meeting 

'*/ PUBLIC LlbnAHY 

Item 1 - File 02-0910 

Note: This item was continued by the Finance Committee at its meeting of July 17, 
2002. This item was amended by the Finance Committee at its meeting of 
July 10, 2002 and was continued. The proposed amendment would make 
issuance of the bonds, subject to the requirement that Chapter 37 of the 
Administrative Code be amended to provide that landlords may passthrough 
to residential tenants 50% of the water bill costs attributable to water rate 
increases resulting from issuance of the Bonds, where a unit is in compliance 
with any applicable laws requiring water conservation devices, tenants may 
file hardship applications with the Rent Board for relief of all or part of the 
cost passthrough and their affected landlords may utilize any available 
Public Utilities Commission low-income rate discount program or similar 
program for water bill reduction based on the tenants' hardship status. 

Further, at the request of the Committee, Ms. Martel will respond directly to 
the Committee pertaining to specific capital improvement project questions 
raised at the Committee's meeting of July 17, 2002. 

Department: Public Utilities Commission (PUC) 

Mayor's Office of Public Finance 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



Item: 



Amount: 



Resolution calling and providing for a special election to 
be held in the City and County of San Francisco for the 
purpose of submitting to the qualified voters of said City 
and County on November 5, 2002 a proposition for the 
issuance of revenue bonds and/or other forms of revenue 
financing by the Public Utilities Commission in a 
principal amount not to exceed $1,628,000,000 to finance 
the acquisition and construction of improvements to the 
City's water system and for the possible imposition of a 
surcharge on retail water customers; and consolidating 
said special election with the General Municipal Election 
to be held on November 5, 2002; finding the proposed 
project is in conformity with the priority of Planning Code 
Section 101.1(b) and the City's General Plan. 

The maximum principal amount is not to exceed $1,628 
billion. 



Source of Funds: 



Description: 



Revenue bonds and/or other forms of revenue financing. 
Other forms of revenue financing include notes, 
debentures, commercial paper, variable rate demand 
notes and bonds, auction rate securities, lease revenue 
bonds, installment sale agreements, and other forms of 
similar financial products which may be created from 
time to time. 1 

The PUC has identified water system ($3,628 billion) and 
clean water system ($996 million) capital improvement 
costs totaling $4,624 billion, comprising: 



1 According to Ms. Karol Ostberg of the PUC, the PUC will manage its debt portfolio to achieve an 
overall objective of minimizing costs and maintaining flexibility to respond to changing market 
conditions and a dynamic capital improvement program. The bulk of the debt is anticipated to be 
long-term fixed-rate revenue bonds which have the advantage of known financing costs over the 
useful life of the asset being financed. The PUC also anticipates using certain types of variable rate 
debt to take advantage of lower average interest rates. Use of such instruments would be 
particularly advantageous during construction of capital projects, by lowering the cost of capitalized 
interest. In addition, certain types of variable rate debt may be issued to permanently fund project 
costs. The added benefit of overall lower interest rates associated with variable rates is somewhat 
offset by the interest rate volatility associated with variable rate debt, so such debt would not exceed 
25 percent of the entire bond issuance, according to Ms. Ostberg. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

2 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



• $2,913 billion for regional water system 
improvements 2 . Regional customers would pay 
approximately 69 percent of the cost (approximately $2 
billion) and San Francisco ratepayers would pay 
approximately 31 percent of the cost (approximately 
$913 million). 

• $715 million for local water system projects within San 
Francisco 3 . This would be entirely funded by San 
Francisco ratepayers. 

• $996 million for Clean Water capital improvement 
projects within San Francisco 4 . This would be entirely 
funded by San Francisco ratepayers. As explained in 
Comment No. 15 below, separate bond issues would be 
required for these projects which are currently 
estimated to total $996 million. 

The $3,628 billion water system capital improvement 
program is intended to replace or repair aging water 
system facilities since many of the system's components 
are at the end of their useful life, address seismic 
concerns (particularly the lack of back-up facilities), 
accommodate future increases in the demand for water, 
and meet future regulatory requirements for the quality 
of drinking water. If this requested revenue bond 
authorization is approved by the voters in the November 
of 2002 election, the 13 year capital improvement 
program would start in 2003 and construction would be 
scheduled for completion by 2016. The PUC would review 
and update the plan annually during this 13 year 
program. 

The water system capital improvement program consists 
of the 77 projects listed in Attachment V, provided by the 
PUC. These 77 projects comprise: 



2 Under the Amendment of the Whole, the regional water system comprises faculties for the storage, 
treatment, and transmission of water operated and maintained by the City in the Tuolumne, 
Stanislaus, San Joaquin, Alameda, Santa Clara, and San Mateo Counties, plus three reservoirs in 
San Francisco itself. The regional water system provides water to the City and the PUC's 29 
wholesale customers, who disperse the water to 1.6 million clients in Alameda, San Mateo, and 
Santa Clara Counties. 

3 The local water system delivers water from the regional water system throughout the City and 
stores a portion of it locally in City reservoirs. 

4 The clean water system collects, treats, and disposes City sewage and storm water. The City also 
contracts with public sector agencies in San Mateo County to provide wastewater services. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

3 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



(a) 37 regional water system capital improvement 
projects, including three reservoirs within City 
boundaries which are considered to be regional 
assets. These 37 projects would cost a total of $2,913 
billion of which regional customers would pay 
approximately $2 billion (approximately 69 percent) 
and San Francisco ratepaj^ers would pay 
approximately $913 million (approximately 31 
percent), as itemized in Attachment V. This split in 
financing responsibility is discussed in Comment No. 
6. 

(b) 40 local water system capital improvement projects 
at a cost to San Francisco ratepayers of $715 million. 

The total cost to San Francisco ratepayers of these 77 
projects is $1,628 billion. The proposed revenue bonds in 
the amount of $1,628 billion would fund: 

• $937 million for the actual project construction costs 
(approximately 57.6 percent of the total $1,628 billion 
cost). 

• $210 million in escalation costs assuming 3 percent 
annual inflation during the 13 year construction 
period (approximately 12.9 percent of the total $1,628 
billion cost). 

• $185 million in program contingency costs and 
management reserves (approximately 11.4 percent of 
the total $1,628 billion cost). According to Ms. Karol 
Ostberg of the PUC, this amount includes a 10 
percent margin for program contingencies for the 
purpose of completing the program on budget and on 
schedule (10 percent of total construction and 
escalation costs is $115 million). The contingency will 
only be available for changes in scope and design that 
cannot be foreseen at the capital improvement 
program's outset. In addition, there is a 6 percent 
management reserve (6 percent of total construction 
and escalation costs is $69 million). Management 
reserves are required by large capital improvement 
programs in order to manage externally imposed 
conditions, critical emergencies, and other conditions 
that cannot be predicted in advance. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

4 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



$296 million for financing costs (approximately 18.2 
percent of the total $1,628 billion cost). This amount 
comprises: 



Financing Costs 


Cost 


Costs of issuance 5 
Reserve fund deposit 6 
Bond insurance premium 7 
Capitalized interest fund 8 

Total: 


$16,280,000 

115,292,000 

8,140,000 

156.288.000 

$296,000,000 



The breakdown of this $1,628 billion in costs between 
regional water projects and local water projects is shown 
in the following table: 





Construction 


Construction 
Inflation 


Contingency & 

Management 

Reserve 


Financing 
Costs 


Totals 


Regional Water 
Local Water 

TOTAL: 


$519,437,000 
417.854.000 

$937,291,000 


$123,899,000 
85.814.000 

$209,713,000 


$103,792,000 
81.29G.000 

$185,088,000 


$166,026,000 
129.974.000 

$296,000,000 


$913,154,000 
714.938.000 

$1,628,092,000* 



* Note: Rounds to $1,628 billion. 

All expenditures of bond proceeds for capital improvement 
program purposes, and all capital budgets, are subject to 
appropriation approval by the Mayor and the Board of 
Supervisors. 



5 Costs of issuance include (a) rating agency fees (an estimated $6,512,000 or approximately 40 
percent of the total costs of issuance), (b) bond counsel fees (an estimated $5,698,000 or 
approximately 35 percent of the total costs of issuance), (c) financial advisory fees (an estimated 
$2,442,000 or approximately 15 percent of the total costs of issuance), and (d) printing and 
distribution of official statements, and other related fees (an estimated $1,628,000 or approximately 
10 percent of the total costs of issuance). 

6 The debt service reserve fund is equal to maximum annual debt service. 

7 A bond insurance policy makes scheduled debt service payments if the issuer fails to do so. Bond 
insurance provides an issue an AAA rating and the resulting lower interest rates save more than the 
cost of the bond insurance premium, according to Ms. Ostberg. 

' The capitalized interest fund is for bond proceeds which are reserved to pay interest on an issue for 
a period of time early in the term of the issue when capital improvement project construction is 
commencing. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

5 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 

The proposed resolution to authorize a $1,628 billion 
revenue bond issue, although considerably smaller than 
the original $3,628 billion proposal, would remain the 
largest single voter authorization ever put before San 
Francisco voters. As noted above, the $1,628 billion in 
revenue bonds would finance the 77 water system capital 
improvement projects listed in Attachment V. 

Comments: Capital Improvement Program Planning 

1. In February of 1998, the PUC published a draft long- 
term Water Enterprise capital improvement plan which 
identified projects cumulatively costing an estimated $3.5 
billion and initiated development of a Program 
Management Consultant contract to assist with delivering 
such a large capital improvement program. In January of 
2000, two long-range financial reports by Bartle Wells 
Associates recommended that the PUC develop and adopt 
an integrated capital improvement program and long- 
range financial plan. In February of 2000, the State 
Auditor General recommended the completion of a long- 
range capital improvement program financial plan. In 
April of 2000, the PUC published a Water Supply Master 
Plan and a Facilities Reliability Plan which identified 
critical water system capital improvement projects, most 
of which were included in prior reports, but which failed 
to develop financing plans. On August 28, 2000, the 
Board of Supervisors authorized the first year of a four- 
year Program Management Consultant contract between 
the PUC and the San Francisco Water Alliance 9 , now 
renamed the Water Infrastructure Partners (see 
Comment No. 17). Since then, the PUC and the Program 
Management Consultant have worked to develop plans 
which (a) prioritized capital improvement projects in 
terms of their ability to improve reliability and reduce 
exposure to risk, (b) accurately estimated individual 
capital improvement projects' costs, (c) specified the 
project activities and staffing required to complete 
individual capital improvement projects, and (d) included 
financing plans. 



9 The San Francisco Water Alliance was a joint venture of Bechtel Infrastructure Corporation, The 
Jefferson Company, and Sverdrup Civil, Inc. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

6 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



2. The PUC hired a permanent General Manager in 
September of 2001 who focused on further development of 
the capital improvement program. In January of 2002, 
the General Manager presented the PUC with revised 
draft capital improvement plan documents. In response, 
the PUC requested public hearings to solicit feedback 
from local ratepayers and regional customers. Further 
revisions to the draft capital improvement program 
documents were made based on the input received at the 
public hearings, and on May 28, 2002, the PUC approved 
three key documents: 

• A Long-Term Strategic Plan for Capital Improvements 
which identifies strategic objectives and performance 
measurements to guide the capital improvement 
program. 

• A ten-year capital improvement program showing 
capital improvement program costs and schedules. 
Ms. Ostberg advises that all projects will begin 
construction within ten years, but that some may take 
up to an additional three years to close-out or 
complete, for a total of 13 years. 

• A Long-Range Financial Plan which recommends an 
optimal strategy for financing the capital improvement 
program. 

Evaluations of the Capital Improvement Program 

3. Following a recommendation from the Mayor's Public 
Utilities Infrastructure Task Force, the PUC's General 
Manager hired R.W. Beck, an independent engineering 
firm, to review the development and validity of the entire 
capital improvement program, the PUC's ability to 
successfully implement a capital improvement program of 
that size, and the long-range financial plan. Ms. Ostberg 
states that R.W. Beck was selected by the PUC General 
Manager on the basis of that firm's reputation, experience 
with similar projects, independence from the PUC (it has 
no other business with the PUC), and availability. 
Appendix 1 to this report presents a digest of R.W. Beck's 
conclusions and recommendations. 

4. In April and May of 2002, the R.W. Beck evaluation 
was reviewed by a Blue Ribbon Panel of professionals 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

7 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



selected by the PUC's General Manager in consultation 
with the San Francisco Planning and Urban Research 
Association (SPUR) who had expertise in water delivery, 
infrastructure, planning, finance, and other disciplines. 
This panel made a number of recommendations which are 
also summarized in Appendix 1 to this report. 

5. Attachment I, provided by the PUC, states that the 
PUC agrees with all of the recommendations made by 
both R.W. Beck and the Blue Ribbon Panel, and states 
that it plans to implement those recommendations over 
the next two to three years. 

Concurrent Legislative Developments 

6. As outlined in Attachment I, provided by the PUC, the 
State Legislature is currently considering three bills 
which would impact the PUC's proposed capital 
improvement program. Of these three bills, SB1870 is 
supported by the PUC. SB1870 was originally proposed 
by the Bay Area Water Users Association to give 
wholesale customers more opportunity to be involved in 
financing regional water system capital improvement 
projects. SB1870 proposes to establish an independent 
entity, the San Francisco Bay Area Regional Water 
System Financing Authority, for the financing of regional 
water system projects. If enacted, the San Francisco Bay 
Area Regional Water System Financing Authority would 
assume responsibility for issuing revenue bonds in the 
amount of approximately $2 billion, or approximately 69 
percent of the $2,913 billion regional water system capital 
improvement program costs for which wholesale 
customers are responsible. This would leave the City 
responsible for issuing revenue bonds for the remaining 
approximately 31 percent, or approximately $913 million, 
of the regional water system capital improvement 
program for which the City is responsible. The amount of 
$913 million for the City's share of the regional water 
system capital improvement program plus $715 million 
for the local water system capital improvement program 
totals the $1,628 billion revenue bond issue and/or other 
forms of revenue financing which are now being proposed 
under this legislation. Attachment I, provided by the 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



PUC, outlines the three State bills and their potential 
impacts on the PUC's capital improvement program. 

Capital Improvement Program Funding 

7. According to Ms. Ostberg, the general provisions of the 
sale of the Water Revenue Bonds would be as follows: 

• The timing of the issuance of the water revenue bonds 
each year would be determined by market conditions 
and capital improvement project spending rates. 
While the table below aligns projected bond issuance 
dates with projected capital improvement project 
expenditures, funding in certain years could initially 
take the form of commercial paper or other variable 
rate interest debt to be refunded by later bond issues, 
if financially advantageous to the City. 

• At any given time, the PUC might have financing in 
place such as commercial paper to serve as interim 
financing during the capital improvement project 
construction phases, as well as 30 year term fixed or 
variable rate bonds to provide permanent financing 
once construction is completed. 

• The PUC expects to actively seek and take advantage 
of other financing sources as they become available, 
including State or Federal grants, extraordinary 
revenues (for example, one-time revenues from surplus 
land sales), and State revolving funds. Such 
alternative sources, if available, would reduce the 
amount of bonds which would need to be issued and 
would lower the overall capital improvement program 
costs. 

• Each type of financing would require the prior 
approval of the Mayor and the Board of Supervisors. 

• The water revenue bonds would be issued at an 
interest rate not to exceed 12 percent, or whatever 
future cap (if any) is set by State law. 

8. Attachment II, provided by the PUC, shows the 
projected debt service schedule for proposed revenue 
bonds in the amount of $1,628 billion to be issued during 
the period of FY 2003-2004 through FY 2031-2032. Ms. 
Ostberg states that the average annual debt service 
payment will be $85 million for each of the 30 years from 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

9 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



FY 2003-2004, and the total debt service payment over 30 
years will be $2,551 billion. 

9. Attachment III, provided by the PUC, shows that San 
Francisco ratepayers currently pay the second lowest 
average water rates in the Bay Area. In FY 2002-2003, 
San Francisco ratepayers pay an average monthly water 
bill of $14.43, compared to an average monthly water bill 
of $17.51 across the 12 Bay Area jurisdictions. However, 
as shown in the table below, San Francisco ratepayers' 
share of water system projects would be paid for by 
projected gradual increases in water rates from an 
average monthly bill of $17.16 in FY 2003-2004 to an 
average monthly bill of $47.07 in FY 2015-2016, a $29.91 
per month or approximately a 174.3 percent increase 
using 2003 dollars. Ms. Ostberg advises that the water 
rates of other utilities will also increase during this period 
as a result of their own capital improvement programs or 
because they are wholesale customers of the PUC. 

Even though the proposed resolution reduces the revenue 
bond amount by $2 billion, from $3,628 bilhon to $1,628 
billion, the water service rate increase for San Francisco 
ratepayers would remain 174.3 percent. This is because 
San Francisco ratepayers' share of the water system 
capital improvement program remains $1,628 billion 
under either proposal, comprising $913 million for the 
City's share of regional water system capital improvement 
projects and $715 million for local water system capital 
improvement projects. The remaining $2 billion of 
regional water system projects would be funded by 
regional water customers. 

According to Mr. Bill Berry of the PUC, concerns have 
been expressed by representatives of residential landlords 
and tenants over whether or not the proposed resolution 
should permit residential landlords to recover water rate 
increases from tenants in units covered by the provisions 
of Chapter 37 of the San Francisco Administrative Code 
(the Residential Rent Stabilization and Arbitration 
Ordinance). As of the writing of this report, no decision 
has been made whether or not to include a pass-through 
provision in the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

10 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



10. The following tables present (a) the PUC's projected 
sale of revenue bonds or other instruments in the amount 
of $1,628 billion, and (b) the impacts on residential rates 
for San Francisco households during the period of FY 
2003-2004 through FY 2015-2016. 



Projected Bond Issuance Schedule 



Fiscal Year 


2003-04 


2004-05 


2005-06 


2006-07 


2007-08 


2008-09 


2009-10 


Amount of 
Financing Issued 

Regional Water 
Local Water 
Annual Total 


($ million) 

$7 

10 

$17 


($ million) 

$17 

20 

$37 


(S million) 

$24 

53 

$77 


($ million) 

$67 

67 

$134 


(S million) 

$105 

77 

$182 


(S million) 

$132 
154 

• $286 


(S million) 

$130 
133 

$263 


Fiscal Year 


2010-11 


2011-12 


2012-13 


2013-14 


2014-15 


2015-16 


Totals 


Amount of 
Financine Issued 

Regional Water 
Local Water 
Annual Total 


($ million) 

$165 

77 
$242 


(S million) 

$79 

31 

$110 


(S million) 

$66 
56 

$122 


(S million) 

$56 

37 

$93 


($ million) 

$44 


$44 


(S million) 

$21 



$21 


($ million) 

$913 
715 

$1,628 



Anticipated Impact on Residential Customers 



Fiscal Year 


2003-04 


2004-05 


2005-06 


2006-07 


2007-08 


2008-09 


2009-10 


Average monthly 
cost to SF 
households 


$17.16 


$20.42 


$22.46 


$24.71 


$26.93 


$29.35 


$32.00 


Fiscal Year 


2010-11 


2011-12 


2012-13 


2013-14 


2014-15 


2015-16 




Average monthly 
cost to SF 
households 


$34.88 


$38.01 


$41.06 


$43.11 


$45.26 


$47.07 





BOARD OF SUPERVISORS 
BUDGET ANALYST 

11 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



11. The water rates for San Francisco businesses 
between Fiscal Year 2003-2004 and 2015-2006 would 
increase by an estimated 174.3 percent using 2003 
dollars, the same increase projected for residential users. 

12. The Amendment of the Whole proposes that the 
maximum principal amount of $1,628 billion could be 
reduced if the Board of Supervisors determines that San 
Francisco ratepayers would benefit from having the 
proposed San Francisco Bay Area Regional Water System 
Financing Authority finance, in whole or in part, the 
City's portion of the regional water capital improvement 
program. According to Ms. Theresa Alvarez of the City 
Attorney's Office, if the San Francisco Bay Area Regional 
Water System Financing Authority finances such projects, 
the City would need to take one of two actions in order to 
be a voting member of the San Francisco Bay Area 
Regional Water System Financing Authority, as required 
by SB1870. The City would either have to seek voter 
approval to (a) repeal Proposition H, or (b) impose a 
surcharge on retail water rates so that San Francisco 
ratepayers pay their share of the debt service on the 
bonds issued by the San Francisco Bay Area Regional 
Water System Financing Authority, and its operating 
expenses, given Proposition H constraints on water 
service rate increases. Ms. Alvarez states that if the 
proposed resolution is not approved by the voters, then 
the same powers could be obtained through the proposed 
Charter Amendment described in Comment No. 22 below. 
The size of the surcharge would be dependent upon the 
amount of debt incurred by the San Francisco Bay Area 
Regional Water System Financing Authority and the 
interest rates applying at the time the debt is incurred. 

13. Ms. Ostberg states that during the public hearings 
on the PUC's proposed capital improvement program, the 
PUC received considerable public comment from all 
customer classes on the impact of the proposed bond 
measure on those least able to pay higher rates. 
Therefore, the PUC intends to initiate a rate study to (a) 
review the PUC's rate structure, (b) ensure that rates are 
fairly distributed among customer classes, and (c) 
incorporate a means to support conservation and recycling 
initiatives. The rate study results are expected in early 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

12 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



2003, after the November of 2002 election but prior to the 
first issuance of the proposed bonds and the resulting rate 
increase. Ms. Ostberg advises that this rate study cannot 
be completed earlier because its largest component, a 
demand study, requires examination of the peak demand 
period of September through October of 2002. Ms. 
Ostberg advises that a rate study has not already been 
completed because (a) the PUC lacked a permanent 
General Manager, and (b) one of the key lessons learned 
from the public hearings was the public's desire to better 
understand the PUC rates structure. 

14. Appendix 2 to this report provides additional 
information on the PUC's Water Enterprise credit ratings, 
other financing options if voters do not approve the 
proposed revenue bonds, and Charter Section 9.107 
exceptions. 

15. As noted above, the proposed resolution does not 
cover the current estimate of $996 million needed to fund 
the ten projects designed to replace or repair aging clean 
water facilities. According to Ms. Ostberg, the public 
outreach hearings on the capital improvement plan held 
by the PUC in the Spring of 2002 identified a lack of 
community support for the Clean Water capital 
improvement projects selected by the PUC and raised a 
number of environmental issues. Therefore, the PUC 
General Manager is recommending that the PUC prepare 
a separate, comprehensive sewer service master plan over 
the next 18 to 24 months. Ms. Ostberg states that the 
PUC anticipates bringing a Clean Water Revenue Bond 
proposal to the Board of Supervisors during calendar year 
2004. 

Program Management Consultant 

16. On August 28, 2000, the Board of Supervisors 
approved a four-year contract between the PUC and the 
San Francisco Water Alliance 10 for program management 
services related to the capital improvement program 



10 The San Francisco Water Alliance consisted of Bechtel Infrastructure Corporation, Sverdrup 
Civil, Inc., and The Jefferson Company. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

13 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



(Board Resolution 754-00), subject to annual Board of 
Supervisors approval to renew the contract. 

17. On March 28, 2002, Bechtel Infrastructure 
Corporation withdrew from Contract Year 2 of the 
Program Management Consultant contract, thus 
terminating its contractual relationship with the City. 
The remaining joint venture partners, now consisting of 
Primus Industries, Inc. 11 and Jacobs Civil, Inc. 12 and 
renamed the Water Infrastructure Partners, requested 
that the PUC reassign the program management services 
contract to their reconstituted joint venture, with Jacobs 
Civil, Inc. as the lead partner responsible for meeting the 
contract requirements, the role formerly performed by 
Bechtel Infrastructure Corporation 13 . PUC staff 

determined that the reconstituted joint venture met or 
exceeded each of the original Request for Proposals' 
requirements and was therefore qualified and competent 
to assume responsibility for completing the contract term. 
The PUC accepted the proposed reassignment of the 
contract to the reconstituted joint venture, subject to 
Board of Supervisors approval to (a) reassign the contract, 
(b) waive the competitive procurement requirements of 
Administrative Code Sections 6.40 et seq., and (c) release 
the remaining contract funds for Contract Year 2 which 
expires on September 21, 2002. Board of Supervisors 
approval was granted on June 17, 2002 (File 02-0905). 
According to Mr. Jeet Bajwa of the PUC, it is the PUC's 
intention to request that the Board of Supervisors 



11 On October 1, 2000, The Jefferson Company changed its name to Primus Industries, Inc. Mr. 
Jefferson states that he is the sole owner of Primus Industries, Inc. According to Ms. Lillie Sunday 
of Primus Industries, Inc., on October 1, 2000 The Jefferson Company changed its name to Primus 
Industries, Inc. "to provide the necessary infrastructure required to support our rapid growth in size, 
services, and capabilities. We operate as Primus Industries, Inc. with two subsidiary companies: 
Primus Transportation Company, and Primus Infrastructure Company." Mr. Jeet Bajwa of the PUC 
states that when The Jefferson Company's name change to Primus Industries, Inc. took place on 
October 1, 2000, the Human Rights Commission was advised immediately and Human Rights 
Commission certification was issued on March 12, 2001. However, for the purposes of the former 
San Francisco Water Alliance contract, The Jefferson Company name was left unchanged. 

12 On March 1, 2002, Sverdrup Civil, Inc. was purchased by Jacobs Civil, Inc. and ceased to exist as 
a separate entity. 

13 In a March 28, 2002 letter to the PUC's General Manager, Mr. James Jefferson, President and 
CEO of Primus Industries, Inc. and Ms. Darlene Gee, Vice-President of Jacobs Civil, Inc. state: "We 
propose to rename our joint venture, if desirable, to allow a clean break from the association with 
past perceptions. We would restructure the joint venture and designate Jacobs Engineering as the 
lead. Everything else would remain unchanged." 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

14 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



approve Contract Year 3 continuation of the contract with 
the renamed Water Infrastructure Partners (September 
22, 2002 through September 21, 2003). 

18. The Controller has performed three audits of the 
Program Management Consultant's performance against 
its task orders, short-term performance measures, and 
long-term performance measures (July 20, 2001, October 
2, 2001, and April 8, 2002). In August and September of 
2001, an independent Peer Review Panel reviewed the 
work of the Program Management Consultant u . In May 
of 2002, the PUC completed a new performance 
evaluation of the Program Management Consultant which 
concluded that during the first half of Contract Year 2 the 
Program Management Consultant performed as follows. 
On a scale of 1 (did not deliver as agreed), 2 (partial 
fulfillment), and 3 (delivered as agreed), the Program 
Management Consultant scored 3 for "adherence to 
project schedule" and "task management", 2.61 for 
"adherence to project schedule," and 2.58 for "quality of 
work" in relation to 12 tasks. Therefore, the PUC 
evaluated the Program Management Consultant as fully 
meeting half of its key performance measures. 

19. The Budget Analyst notes that while the PUC 
intended to fully integrate PUC and Program 
Management Consultant staff during the first two 
contract years, such integration has not taken place. The 
Budget Analyst also notes that the ability of the Program 
Management Consultant to achieve significant, 
documented, and verifiable capital improvement program 
management savings remains unproven. 



14 The independent Peer Review Panel, convened to meet the Board of Supervisors requirement for 
an independent peer review of Contract Year 1 of the San Francisco Water Alliance contract, 
comprised Mr. Paul Findley and Mr. Peter Talbot of Malcolm Pirnie, Inc. (a private company of 
environmental engineers, scientists, and planners) and Dr. Douglas Selby, Deputy City Manager of 
the City of Las Vegas. A key recommendation of that peer review was that performance measures 
should be established within each task order issued to the Program Management Consultant by the 
PUC. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

15 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 

Workforce Issues 



20. Since the Budget Analyst's first report on the 
Program Management Consultant contract issued in 
August of 2000, the Budget Analyst has noted the PUC's 
historic inability to fill vacant engineering positions in the 
PUC's Utilities Engineering Bureau. According to Ms. 
Therese Madden of the PUC, as of July 3, 2002 the 
Utilities Engineering Bureau has 60 vacancies out of 197 
positions in total (approximately 30.5 percent). Of these 
60 vacancies, 40 are in engineering classes, out of 119 
engineering positions in total (approximately 33.6 
percent), and ten are in technical classes. Ms. Madden 
states that the PUC has initiated the hiring process for 11 
of the 40 vacant engineering positions. Ms. Madden 
advises that the majority of the remaining 49 vacant 
engineering positions are in classifications which now 
have eligible lists, and therefore hiring appointments 
could be made immediately. However, the hiring process 
has not been initiated for those 49 vacant positions 
because such positions are to work on capital 
improvement projects funded by the proposed revenue 
bonds which have yet to be approved by the voters. Ms. 
Madden states that the Utilities Engineering Bureau does 
plan to initiate the selection processes for these 49 vacant 
positions in the Fall of 2002, in advance of the voters' 
approval of the proposed revenue bonds, so that potential 
candidates can be hired and begin work as soon as the 
revenue bonds are approved. 

21. For FY 2002-2003, the PUC requested $1,849,491 to 
establish a Capital Improvement Program Team to 
manage the capital improvement program. The Budget 
Committee has recommended this request for approval by 
the Board of Supervisors. The requested $1,849,491 
includes $1,186,491 for 18 new positions (13.50 FTEs in 
FY 2002-2003) and $663,000 for contractual services, 
materials and supplies, and equipment. Ms. Madden 
states that the PUC has implemented a hiring plan to 
staff the new Capital Improvement Team by October 1, 
2002. Recruitment has been underway for some time for 
the program manager positions, and the PUC is initiating 
an examination process to establish a permanent list for 
such positions. Selections are currently being made from 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

16 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



the Senior Engineer and Association Engineer lists. The 
PUC intends to make all administrative and clerical 
appointments by October 1, 2002, according to Ms. 
Madden. Attachment IV, provided by the PUC, contains 
the proposed capital improvement program staffing plan 
and an explanation of the FY 2002-2003 capital 
improvement program objectives. 

Proposed Charter Amendment 15 

22. According to Ms. Vicki Clayton of the City Attorney's 
Office, a proposed Charter amendment (File 02-0887) 
would establish the PUC's exclusive control of water and 
clean water utilities; rate setting standards and methods; 
the transfer of surplus funds between utilities; 
independence in contracting; purchasing, hiring, and 
selection of contractors; reporting and planning 
requirements; and authorization of revenue bonds or 
other financing methods without voter approval, if this 
proposed Charter Amendment is adopted by the voters. 
Ms. Ostberg states that to the extent that this proposed 
Charter Amendment gives the PUC authority to issue 
bonds without voter approval, this Charter Amendment 
would negate the need for the proposed voter-approved 
revenue bond issuance of $1,628 billion in its current 
form. 

Fire Department 

23. While the PUC is responsible for managing the low- 
pressure water system, the Fire Department is 
responsible for managing the City's high pressure water 
system, the Auxiliary Water Supply System (AWSS). The 
Capital Improvements Advisory Committee expressed 
concern that the PUC has not consulted the Fire 
Department about the impact of its water system capital 
improvement projects on the AWSS. In Attachment I, Mr. 
Berry states that the proposed capital improvement 
program would not significantly affect, either positively or 
negatively, the performance or reliability of the Fire 
Department's AWSS. 



15 The other PUC Charter Amendment currently before the Rules and Audits Committee, File 01- 
2056, addresses PUC financing authority in relation to the power system only. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

17 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 

Revised 7/19/02 
Item 1 - File 02-0910 



Summary of the 

Issues Noted by the 

Budget Analyst: 1. The Budget Analyst notes a number of issues which 

could impact the size of, and potential voter support for, 

the proposed revenue bond issuance: 

• The PUC's projected 174.3 percent increase in water 
rates payable by San Francisco residential and 
commercial ratepayers over the first 13 years of the 
capital improvement program would adversely impact 
San Francisco ratepayers. 

• The PUC will not be able to issue its proposed rate 
study report, which will ensure that rates are fairly 
distributed among customer classes, before the 
November of 2002 election. 

• The Proposition H water rate and sewer service charge 
freeze has had a negative impact on the PUC's credit 
ratings, increasing interest rates by an estimated 0.2 
percent, which increases debt service by $2,000,000 
annually for every $1 billion of revenue bonds issued. 
Proposition H does not expire until July 1, 2006. 

• The need for the proposed voter-approved revenue 
bond issue could be negated if voters approve a 
Charter Amendment proposed for the November of 
2002 ballot (File 02-0887) which would give the PUC 
authority to issue bonds without voter approval. 

2. The Budget Analyst notes that the PUC's Program 
Management Consultant contract with the San Francisco 
Water Alliance, now reconstituted as the Water 
Infrastructure Partners, has, to date, failed to (a) fully 
integrate PUC and contractor staff, and (b) provide 
significant, documented, and verifiable capital 
improvement program management savings despite the 
PUC's assurances to the Board of Supervisors that such 
savings are achievable. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

13 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



Recommendation: 



3. The Budget Analyst also notes the PUC's historic 
difficulty in filling vacant engineering positions in the 
PUC's Utilities Engineering Bureau which is a key 
resource for implementing the proposed capital 
improvement program funded by the proposed revenue 
bonds. 

Approval of the proposed resolution is a policy matter for 
the Board of Supervisors. 




cc: Supervisor Peskin 
Supervisor Daly 
President Ammiano 
Clerk of the Board 
Controller 
Ben Rosenfield 
Ted Lakey 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

19 



Appendix 1 
Page 1 of 5 

APPENDIX 1: INDEPENDENT EVALUATIONS OF THE CAPITAL 
IMPROVEMENT PROGRAM 

R.W. Beck 

R.W. Beck's May 21, 2002 report on the capital improvement plan concluded that: 

• While supportive of the capital improvement program planning approach, Bay 
Area Water Users Association (BAWUA) members are frustrated by the PUC's 
slow progress in implementing the capital improvements. BAWUA has 
introduced State bills to create an agency which would allow BAWUA members 
to directly fund needed regional water system capital improvements. 

• BAWUA members are concerned whether the PUC intends to continue to be a 
regional water provider that will meet BAWUA members' water supply 
requirements for the long term. 

• The criteria for selecting, sizing, and measuring the performance of capital 
improvement program projects needs to be more fully developed, with 
quantifiable objectives and standards. 

• The proposed capital improvement projects are necessary to maintain the 
regional and local water systems. 

• The proposed capital improvement projects are at varying levels of definition 
and investigation, so the accuracy of the cost and schedule information varies. 
The PUC and its Program Management Consultant had endeavored to 
standardize the costs and schedules. R.W. Beck characterized this work as 
"diligent" and "methodical," stating that the approach followed by the PUC and 
the Program Management Consultant was "consistent with, and probably better 
than that used by most similar utility systems in preparing CIP programs." 

• The consolidated capital improvement program/long-range financial planning 
process clearly prioritizes pi-ojects, ensures better cost estimates, and provides a 
valid basis for approval and adoption. 

• Annual review of the capital improvement program by the PUC is appropriate. 

• Historically, the PUC has tracked capital improvement program costs by 
classification of project which makes it difficult to evaluate the performance of 
individual projects. 

• The long-range financial plan is logically constructed and is based on reasonable 
financial assumptions. 



20 



Appendix 1 
Page 2 of 5 

• Proposition H 1 poses serious threats to the PUC's ability to maintain satisfactory 
reserves and coverage ratios to support the debt that will be needed to fund the 
capital improvement program. 

• The community needs better information on the costs and trends in other cities 
facing similar issues. 

R.W. Beck further concluded that there is a significant risk that the planned level of 
project delivery will not be achieved, especially in the initial years of the program, 
because of: 

• The relative inexperience of the PUC's Capital Improvement Program Manager 
in implementing a capital improvement program of this magnitude and 
complexity. 

• The vacancy of the Assistant General Manager for Infrastructure position. 
According to Mr. Jeet Bajwa of the PUC, this position has been vacant since 
November of 2001. After several internal PUC candidates were considered, the 
PUC hired an external recruitment consultant to advertise the position in May 
of 2002. Ms. Ostberg advises that an interim Assistant General Manager for 
Infrastructure, Mr. Donald Birrer, a former PUC General Manager, was 
appointed on July 1, 2002, while the national recruitment search continues. The 
PUC expects to fill the position by September of 2002, according to Ms. Ostberg. 

• The PUC's cumbersome hiring practices. 

• The status of the program/project monitoring and controls system. Mr. Bajwa 
states that an evaluation of several control system tools is currently underway, 
with a decision expected to be made in December of 2002. 

• The potential 12 to 24 month delay in hiring a new program management 
services contractor if the current Program Management Consultant is replaced. 



1 Proposition H, approved by the voters on June 2, 1998, freezes water rates at their current levels 
until July 1, 2006, proposed to the following exceptions: 

• The rate freeze does not apply to the fees charged to customers located outside of San Francisco. 

• The rate freeze could be suspended if the City declared an emergency, as defined by Charter 
Section 3.100. 

• The rates could be increased to repay the money borrowed through the City's issuance of bonds 
for improvements to the water system approved by the voters in November of 1997 (Propositions 
A and B), but such increases cannot exceed a total of 18 percent during the period between July 
1, 1998 and July 1, 2006. 

• The rates could be increased to repay money borrowed from further improvements to the water 
system approved by voters in the future. 

The effective date of Proposition H, July 1, 1998 followed two years of rate freezes self-imposed by 
the PUC. Therefore, Proposition H froze rates at their 1996 levels through June 30, 2006, with the 
exception of the 18 percent increase allowed for debt service related to Propositions A and B Water 
Revenue Bonds. Of the $304,000,000 authorized by Propositions A and B, the issuance of 
$140,000,000 in Water Revenue Bonds during FY 2001-2002 necessitated an 8.65 percent average 
rate increase for retail customers. The anticipated issuance of the remaining $164,000,000 in Water 
'It, venue Bonds during FY 2002-03 will necessitate a further 8.60 percent average rate increase for 
retail customers, for a compounded cumulative rate increase of 17.99 percent over two years, thereby 
hitting the 18 percent cap imposed by Proposition H (File 02-0904) 



21 



Appendix 1 
Page 3 of 5 

• The need for a tenfold increase in the rate of project delivery. The PUC has 
historically developed and implemented capital projects at a slow pace. 

• The lack of project accountability related to cost and schedule. 

• The lack of an Asset Management Plan to follow-up on capital improvement 
projects after completion. 

• The cumulative effect of all of the tasks scheduled to be accomplished over the 
next 12 months. 

Based on the above conclusions, R.W. Beck recommended that the PUC: 

• Coordinate with BAWUA to (a) refine the Regional Water Master Plan to reflect 
mutually agreeable performance standards, (b) conduct an integrated resources 
management plan, and (c) evaluate alternative regional associations for 
implementing critical regional water improvements. 

• Formally adopt the capital improvement program, establish a process for the 
annual update, reporting, and/or approval of changes, and declare that the PUC 
intends to be a long-term regional provider of water. 

• Continue to use the cost model, capital improvement program scheduling, and 
"optioneering" 2 tools developed over the last two years. 

• Make hiring an Assistant General Manager for Infrastructure a top priority to 
(a) manage external communications and expectations, and (b) develop a 
Business Plan with the Program Management Consultant. 

• Establish a joint venture between the PUC's Capital Improvement Program 
Group and the Program Management Consultant to establish a clear and 
integrated working relationship between the two organizations. Such an 
arrangement is not unusual in implementing major public sector projects with 
private consultants, according to R.W. Beck. 

• Develop a dual-track or contingency plan approach for capital improvement plan 
implementation during the first several years. 

• Develop an Asset Management Plan to track future system maintenance and 
capital replacement requirements. 

• Implement a capital improvement program oversight committee to conduct an 
annual review of the capital improvement program. 

• Implement an internal Technical Advisory Committee to provide oversight of 
individual capital improvement program projects. 

• Streamline PUC review and approval processes. 

• Capitalize interest over three years rather than two years to better represent the 
costs incurred prior to project commercialization. 



2 "Optioneering" is a process which uses alternative analyses to (a) identify the real project needs, 
(b) determine the appropriate evaluation criteria, (c) evaluate solutions against those criteria, (d) 
select the optimum project, (e) define the design base, and (f) obtain engineering and customer 
concurrence. The optioneering assessment should include capital and operating costs, specification 
requirements, environmental implications, and preliminary schedules. 



22 



Appendix 1 
Page 4 of 5 

Take the steps necessary to protect bond ratings given the capital improvement 
program's debt financing requirements. 

Review the formula for calculation of Suburban Water Revenue Requirements 
when the Master Water Sales Contract is renewed. If possible, the PUC should 
amend the Master Water Sales Contract (which is due to expire on June 30, 
2009) prior to any additional bond issues. If revenues can be more closely tied to 
debt service, the financial community's confidence should be enhanced. 



Blue Ribbon Panel 

In April and May of 2002, the R.W. Beck evaluation was reviewed by a Blue Ribbon 
Panel of professionals with expertise in water delivery, infrastructure, planning, 
finance, and other disciplines, convened by the San Francisco Planning and Urban 
Research Association (SPUR) 3 . The Blue Ribbon Panel concluded that the R.W. 
Beck evaluation was "very competent, comprehensive, rigorous, accurate and on 
target for this stage in the [capital improvement] program." The Blue Ribbon Panel 
further recommended that: 

• Develop project management and accounting mechanisms which allow for real- 
time assessment of project status and cost-run rates, and which are consistently 
applied to all capital improvement projects. 

• Fully integrate the Facilities Reliability Program (seismic) and the Water 
Supply Master Plan (conservation, desalination, and recycling), and develop 
detailed, regularly updated system recovery plans. 

• Clearly delineate seismic design, water reliability, and drought supply 
standards. The capital improvement program should be flexible enough to adapt 
to higher water treatment standards in the future. An analysis should be 
conducted of whether system replacement every 100 years is an acceptable fife 
cycle. 

• Explain to the public the reasons for potential uncertainties in project cost 
estimates in order to allay public concerns about budget overruns. 



3 The panel members were (a) Jim Chappell, SPUR, (b) Margaret Bruce, Silicon Valley 
Manufacturing Group, (c) Dennis Diemer, East Bay Municipal Utility District, (d) David Dow all, 
University of California, (e) Jeanne Myerson, San Francisco Chamber of Commerce, (f) John Wise, 
Natural History Institute, and (g) Greg Zlotnick, Santa Clara Valley Water District. 



23 



Appendix 1 
Page 5 of 5 

Report on the projects planned and completed pursuant to Propositions A and 
B 4 , as well as an assessment of who those projects relate to the capital 
improvement program. 

Develop a larger policy context to guide implementation and define priorities in 
terms of environmental stewardship, environmental justice, stakeholder 
involvement, the PUC's role, regional service commitments, integrated resource 
planning, and regional crisis planning. Once policies and goals are established, 
they should be translated into performance measures. 

Streamline contracting procedures and incorporate penalties for cost overruns, 
sharing of cost savings, and bonuses for completion ahead of schedule. 
Clearly differentiate between projects which require permanent staff (for 
ongoing utility functions) and projects which require consultants (for time- 
defined tasks). 

Develop a rate structure which includes incentives for suburban customers to 
reduce peak water usage. Reduction of future peak demands could reduce the 
size of future facilities and, therefore, capital improvement program costs. 
Take account in the long-range financial plan of lower interest rates for bond 
money. 



4 In November of 1997, voters approved $157,000,000 of Water System Reliability and Seismic 
Safety Bonds and $147,000,000 of Safe Drinking Water Revenue Bonds, for a total of $304,000,000. 
According to Ms. Ostberg, the PUC spent the first 18 months planning and designing the 
construction projects and putting a commercial paper program into place. While the ordinances 
indicated that revenue bonds would be the ultimate funding source for the projects authorized by 
Propositions A and B, from July of 1999 the PUC used commercial paper to fund the initial 
expenditures because commercial paper provided greater flexibility and lower interest rates. The 
PUC issued $140,000,000 of these bonds in August of 2001, of which approximately $85,000,000 was 
used to refund outstanding commercial paper notes, and the remaining $164,000,000 is anticipated 
to be sold in FY 2002-03. The proceeds of that second issue will, after payment of issuance costs, be 
used to retire all outstanding commercial paper notes, and the remainder will be applied towards 
approved Proposition A and B projects. Of the seismic and safety projects, at February 28, 2002, 35 
percent were complete, 57 percent were underway, and 8 percent had not been started. Of the water 
quality projects, at February 28, 2002, 28 percent were complete and 72 percent were underway. 



24 



Appendix 2 
Page 1 of 2 

APPENDIX 2: FINANCING ISSUES 

Water Enterprise Credit Rating 

On June 10, 2002, the Budget Analyst issued a Review of Best Practices for 
Financing Large Capital Improvement Projects at Municipal Utilities in the State of 
California, which was prepared in conjunction with the Legislative Analyst's Office, 
the Mayor's Director of Public Finance, and the PUC. In that report, the Budget 
Analyst concluded that the Proposition H rate freeze has had a negative impact on 
the Water Enterprise's credit ratings. 

Prior to the rate freeze, Moody's rated the Water Enterprise as "Aa" and Standard 
and Poor's rated the Water Enterprise as "AA with a stable outlook." Now, Moody's 
rates the Water Enterprise as "Al" and Standard and Poor's rates it as "A+ with a 
stable outlook." Of the 12 major Californian public utilities surveyed by the 
Legislative Analyst's Office, the Water Enterprise (in combination with the Clean 
Water Enterprise) had the lowest Moody's and Standard and Poor's ratings. Both 
rating agencies advised the Legislative Analyst's Office that ratings upgrades would 
not occur until the Water Enterprise's financial profiles, as measured by factors 
such as debt service ratios, improve dramatically, coupled with reassurances that 
the capital improvement program would be implemented and supported with a 
credible and sustainable financial plan. Such financial improvements could only 
occur by increasing water service rates and obtaining rate-making authority to 
further increase water service rates in the future in order to ensure financial 
stability, flexibility over capital improvement program implementation, and funding 
authorization. 

Financial projections for the Water Enterprise indicate that its financial viability 
will largely be maintained through FY 2006-2007, and that the City will be able to 
meet the debt service coverage requirements contained in the Water Revenue Bond 
covenants 1 . However, these projections do not include funding the capital 
improvement program's water projects. The Mayor's Director of Public Finance, 
Ms. Monique Moyer, estimated that the Water Enterprise's lowered credit ratings 
would result in a 0.2 percent increase in interest rates if the PUC issued new 
revenue bonds today, which is $2,000,000 of additional debt service annually for 
every $1 billion of revenue bonds issued. 



1 Debt service coverage requirements in the revenue bond indentures require that net revenues, 
together with unappropriated fund balances, in each fiscal year must be equal to at least 1.25 times 
more than the revenue bond annual debt service due in that fiscal year. 



25 



Appendix 2 
Page 2 of 2 



Other Financing Options if Insufficient Voter Support 



According to the Long-Range Financial Plan, without additional voter-approved 
debt, capital investment in the water system will be limited to the approximately 
$20,000,000 annually which can be supported by operating revenues. Attachment I, 
provided by the PUC, explains the full range of options available to the PUC if the 
proposed bond measure was not passed by the voters. These options are: 

• Delaying projects until voter approval is secured. 

• Delaying replacement and repair projects until after the July 1, 2006 expiration 
of the Proposition H rate freeze, at which time three-quarters of the Board of 
Supervisors could approve such projects (barring any other voter-imposed 
restriction). 

• Losing PUC control of the regional water system to a regional financing 
authority. 

The Budget Analyst notes that there is also the option of entering into an 
agreement with regional water service customers, and perhaps with the State, to 
permit regional participants to directly finance regional projects and jointly assume 
the risks involved. Under this scenario, the city would pay one-third of the cost of 
such projects by making payments to a Joint Powers Authority formed by its 
customers. This approach would raise issues about the ownership of improvements, 
operation of the regional system, and the governance and powers of the Joint 
Powers Authority. 



Charter Section 9.107 

There are exceptions to the voter approval requirement of Charter Section 9.107 
which mandates that the issuance of revenue bonds for the water system be 
approved by a simple majority of the electorate. Revenue bonds can be issued for 
the water system with a three quarters approval of the Board of Supervisors if the 
proceeds of such bonds are used to: (a) comply with a State or Federal order, (b) 
reconstruct or replace existing water facilities under the PUC's jurisdiction, or (c) 
create or maintain alternative energy sources. 

In Attachment I, Mr. Bill Berry of the PUC advises that "a portion of the projects 
for the local water system qualify for financing pursuant to this provision." 
However, Mr. Berry notes, as a result of the Proposition H rate freeze, rates could 
not be raised to fund debt service on bonds that do not have voter approval. 
Therefore, issuance of bonds under Charter Section 9.107 would be restricted until 
after July 1, 2006, and could be restricted by future voter action. 



26 



10.-03-2202 17:31 






^gr 



PUC FINANCE 



Attachment I 



L5 4S7 5253 P.Qi. 



Page 1 of 6 

San Francisco Public Utilities Commission 



M E MO RAND U M 




DATE: July 3, 2002 

TO: Board of Supervisors' Budget Analyst 

FROM: Bill Berry, Assistant General Manager 

for Finance &. Administration, 5FPUC 

SUBJECT: Water Bond Measure (File 02-0910) 



cc: Patricia E. Martel, GM, SFPUC 



Summary 

This memorandum is intended to respond to certain questions raised by the Board of 
Supervisors' Budget Analyst In its review of the proposed bond measure for the Water 
Enterprise. 

Follow-up to RW Beck & Blue Rjbbon Panel 

As noted in the Budget Analyst's report, the SFPUC retained RW Beck to review its proposed 
Capital Improvement Program and Long-Range Financial Plan. RW Beck was selected by the 
SFPUC based on Beck's national reputation for providing Independent reviews associated 
with Bond Financings and capital programs In the water and wastewater areas, and because 
RW Beck had not provided other consulting or engineering services to the SFPUC in the 
past. 

RW Beck's report provides a review of three areas: 

n CIP Process: RW Beck reviewed the development and validity of the CIP as proposed 
by SFPUC staff. 

n CIP Implementation: RW Beck reviewed the SFPUC's ability to successfully deliver 
the proposed program in an efficient and timely manner. 

a CIP Revenue Requirements: RW Beck reviewed the proposed Long-Range Financial 
Plan. 

In general, RW Beck concluded that the proposed CIP was developed through a 
Comprehensive Process, that the CIP projects are good and necessary, and that the CIP 
effort and level exceeded the norm. In addition, RW Beck concluded that the LRFP was 
logically constructed and functionally correct, and that the financial assumptions are 
reasonable. 

In its review of CIP implementation, RW Beck noted a number of challenges, including 
leadership concerns, staffing and hiring, and concerns related to the SFPUC's program 
management consultant. RW Beck provided a number of specific recommendations, with 
which the SFPUC concurs completely. The SFPUC has already initiated follow-up in a number 
of key areas: 

a Leadership: The SFPUC has hired Don Blrrer (formerly Executive Director of the 
Clean Water Program and General Manager of the SFPUC) as Interim Assistant 
General Manager for Infrastructure to provide high-level leadership to the CIP. The 
SFPUC's new CIP Group and its Utilities Engineering Bureau, led by Karen Kublck and 
Michael Quan, respectively, will report to Mr. Birrer. In addition, the SFPUC has a 
recruitment effort underway to Identify and hire a permanent AGM for Infrastructure, 



27 



JLL-Q3-2CQ2 17:31 FUC FINRNCE Attachment I ^467 5253 P.a2*S 

Water Bond Measure (File 02-0910) -2- Page 2 ot 6 July 3, 2002 

with the expectation that this process will be completed by the end of September 
2002. 

n Program Management Consultant: With the concurrence of the Board of Supervisors, 
the SFPUC has retained the Water Infrastructure Partners, led by Jacobs Engineering 
and Primus Inc., as Its program management consultant following the departure of 
Bechtel from the San Francisco Water Alliance joint venture. 

h Staffing and Hiring: The SFPUC has undertaken a concerted effort to Identify and 
hire qualified candidates to fill positions critical to implementing the capital 
improvement program. The initial results of a widespread recruiting effort are 
encouraging and we expect to have the key positions filled within the next few 
months. 

a Other Recommendations: The SFPUC concurs with most of the implementation- 
related recommendations from RW Beck and is committed to implementing them 
under the direction of the AGM for Infrastructure and with the support of other 
departments of the SFPUC. 

As noted in the Budget Analyst's report, an independent Blue Ribbon Panel, at the request 
of the SFPUC's General Manager, reviewed the RW Beck evaluation. In addition to their 
conclusions about the excellent quality of RW Beck's review, the Panel provided a number of 
policy recommendations to the Commission. The SFPUC concurs with these 
recommendations and plans to implement them. 

Potential Impact of State Legislation 

The Budget Analyst's report notes the three bills under consideration by the California State 
Legislature that could impact San Francisco's control and operation of the Hetch Hetchy 
Water System. These bills are further described below: 

a SB 1870 (sponsored by State Senator Jackie Speier): This bill has been 
approved by the State Senate, Is now pending in the Assembly, and the Governor 
has indicated his intention to sign it. Effective January 1, 2003, SB1870 would 
establish the San Francisco Bay Area Regional Water System Financing Authority to 
assist in financing construction of projects on the regional Hetch Hetchy system. 
Upon passage, it would be possible for the Authority to issue revenue bonds on 
behalf of the wholesale customers of the water system to finance regional projects. 
The Senate has approved this legislation, but passage by the Assembly is not 
expected until August. The Governor has indicated he will sign it. 

This could effectively reduce the proposed bond measure by approximately $2 billion. 
It would still be necessary, however, for San Francisco voters to approve bond 
financing for the San Francisco share of the cost of capital improvement projects on 
the regional system (approximately $900 million for the proposed CIP) and to fund 
projects related to the local distribution system (estimated at $715 million). 

a AB1823 (sponsored by Assemblyman Lou Papan); AB1823 would require the 
City to adopt a Capital Improvement Program and Emergency Response Plan by 
February 2003. The City would be required to complete nine specific regional water 
projects within a specific timeframe contained within the bill. The entire regional 
Capital Improvement Program would be subject to oversight by the State ■ 

Department of Health Services (DHS), a role that heretofore they have not 
performed nor are equipped to perform within the state. The bill also further extends j 

this DHS oversight on the operation and maintenance of the regional water system, s 

including budgets and power operations. There are many other portions of the bill j 

that the City has also found to be disagreeable. The City continues to oppose this bill 

23 ! 



JUL-03-2002 17 = 32 FUC FINfiNCE Attachment I ^487 5258 P.Q3/QS 

Water Bond Measure (File 02-0910) -3- Pa § e of July 3, 2002 

AB2058 (sponsored by Assemblyman Lou Papan): AB2058 creates the Bay 
Area Water Supply and Conservation Agency, which would have the ability to plan, 
finance, build, and operate facilities for collection, transmission, reclamation, reuse, 
and conservation. The Agency could also acquire water and water rights, develop 
and store water, and sell water. 

If SB 1870 (Speier) were enacted, the San Francisco Bay Area Regional water 
System Financing Authority would be charged with Issuing revenue bonds for the 
SFPUC's Regional Water Capital Improvement Program. In contrast, the Agency 
created by AB 20S8 would be able to build various local water projects for the 29 
wholesale customers who have agreed to participate in the authority, separate and 
distinct from the Hetch Hetchy system, AB 2058 would not impact the SFPUC's CIP. 

R&.R Project Financing without Voter Approval (Charter Section 9} 

Under Charter Section 9.107, the SFPUC may, upon vote of three-quarters of the Board of 
Supervisors, Issue revenue bonds "for the purpose of the reconstruction or replacement of 
existing water facilities" (R8lR Bonds). As a result of the Proposition H rate freeze, rates 
could not be raised to fund debt service on bonds that do not have voter approval. 
Therefore, Issuance of bonds under this provision of the Charter is restricted until after July 
1, 2006, and could be further restricted by future voter action. 

A portion of the projects for the local water system qualify for financing pursuant to this 
provision (an opinion of the City Attorney and Bond Counsel has been requested to further 
refine eligibility requirements). Therefore, It would be possible for the Board (upon the vote 
of three-quarters of the members) to approve the issuance of bonds for eligible projects 
beginning in four y*ars. Voter approval would be necessary for non-R&R projects, or the 
bulk of regional facilities, local recycling projects, and selected other projects. 

Available Options if Bond Measure Fails 

While there is evidence of strong public support for a bond measure intended to protect the 
water system, the following options are available if the proposed bond measure fails: 

a Non-R8i.R projects would have to be delayed until voter approval is secured. 

a Projects eligible for R&R status could be approved by three-quarters of the Board 
members for issuance after expiration of the Proposition H rate freeze. The CIP 
would have to be delayed until that time. 

b Given the need to complete regional system capital projects, there is a risk that the 
State Legislature would adopt legislation removing SFPUC control of the regional 
water system, authorizing the issuance of revenue bonds by the Financing Authority, 
and requiring surcharges for San Francisco retail customers to cover their allocable 
share of debt service on bonds, 

CIAC-Related Questions 

The Budget Analyst's report notes certain questions raised by the Controller and the Mayor's 
Director of Public Finance at the June 28, 2002, meeting of the Capital Improvement I 

Advisory Committee (CIAC). While the SFPUC is meeting with the Controller and Director on 
July 3, 2002, to further discuss their concerns, the SFPUC believes that its CIP and Long- : 

Range Financial Plan provide the most reasonable method of estimating future costs and 
providing for uncertainty in inflation, interest rate and other assumptions. A discussion of 
the specific questions mentioned in the Budget Analyst's report is provided below: 

? 
a Size of Proposed Bond Measure: The Commission has requested the Board place a 
$3.6 billion bond measure on the November ballot to finance water system 



RjCFlNfiNCE Attachment I «*» P.Mg 

Water Bond Measure (File 02-0910) -4- Page 4 ot b July 3, 2002 

improvements. As noted elsewhere In this memorandum, the creation of a Regional 
Financing Authority by SB1870 would provide a new mechanism for financing the 
share of costs supported by our wholesale customers, and reduce the required bond 
authorization to approximately $1.6 billion. The SFPUC is reasonably certain that this 
legislation will be approved and Is willing to consider a reduction in the proposed 
ballot measure authorization at this time. 

The Controller and Finance Director have questioned whether the proposed bond 
authorization might be reduced by changes in various assumptions, including some 
discussed below. It is important to note that our Long-Range Financial Plan provides 
a conservative estimate of future costs based on the cost estimates for capital 
projects contained in the CIP. We recognize that actual results will vary based on a 
variety of factors, and that we cannot provide certainty that the estimates provided 
for this program will be achieved. Nevertheless, it is important to let our ratepayers 
know what kind of rate increases they can expect to fund this program. If the 
proposed projects are executed according to the CIP schedule, the current IRFP 
provides the best estimate of the amount of required bonds and rate impacts. 

a Impact of Proposed Legislation: The potential Impact of the proposed Speier 
Legislation (SB1870) on the amount of bonds required has been addressed 
elsewhere In this memorandum. Financing projects on behalf of the regional 
wholesale customers using this mechanism represents a significant change in 
approach. Currently, costs allocated to the wholesale customers based on the Master 
Water Sales Contract. In general, projects must be completed and placed into 
service before the wholesale customers begin paying. The City must finance projects 
prior to that time, although capitalized interest Is assumed during construction so as 
not to burden City ratepayers. 

On the other hand r after projects are placed in rate base, the wholesale customers 
pay a rate of return (based on the City's embedded cost of capital) and straight-line 
depreciation. The City recovers its full cost over the life of an asset using this 
methodology. However, the Initial combination of rate of return plus depreciation 
exceeds the City's incremental debt service attributable to the wholesale customer's 
two-thirds share of project costs. This "extra" revenue has been used to keep rates 
for City customers lower than they would be if all customers, retail and wholesale, 
paid a pro rata share of debt service at all times. 

Therefore, one impact of financing wholesale costs under SB1870 will be somewhat 
higher rate Increase estimates for City customers In the future. The SFPUC believes 
that this impact can be offset somewhat by the use of capitalized interest to phase in 
debt service costs gradually. 

Note that the change in methodology would not result in a shifting of the long-term 
burden of costs between City and wholesale customers, as the wholesale customers 
pay their full share of costs under the Contract. 

a Conservative Assumptions — Contingency and Management Reserves: The CIP is 
built on cost estimates for each of the 77 Individual projects in 2003 dollars. These 
costs are escalated based on the length of construction for each project and a three 
percent annual inflation rate. There is an expected variance on each project cost 
estimate because the projects have not completed final design and engineering. The = 

San Francisco Water Alliance reviewed each estimate and conducted a statistical j 

analysis to determine what the variability of the cost estimate for the entire program ? 

of 77 projects would be. They recommended a total 16 percent contingency and « 

reserves to provide a 75 percent confidence of delivering the entire program within I 

the overall cost estimate. Therefore, the program contains $409 million of J 



JUL-02-2E02 17:33 PUC FINANCE is... v. T 415 4Q? 525a P n^nc 

Attachment I 13 "' -^-^ P-SS/Qb 

Water Bond Measure (File 02-0910) .5-Page 5 of 6 July 3, 2002 

contingency and reserves for this purpose. These provide a measure of protection 
against cost overruns on individual projects and unforeseen events or changes In 
regulations. Contingencies of this nature are recommended for capital projects and 
programs, and the SFPUC believes the level of such funds for this CIP is appropriate. 
This belief has been confirmed by the independent engineering firm, RW Beck, that 
reviewed the CIP and LRFP. 

n amount of Capitalized Interest: The LRFP assumes that interest will be capitalized 
for two years at the bond interest rate (5.5 percent) for each capital project. Without 
capitalized interest, it would be necessary to raise rates earlier and in greater 
amounts than is shown in the LRFP. The Controller questioned whether the 
capitalized Interest assumption is based on the fact that City ratepayers must "carry" 
the cost for wholesale customers while projects are under construction. Capitalized 
interest is necessary irrespective of this factor. Without It, rates would have to be 
increased more quickly. In addition, If the projects for the Suburban customers are 
financed through the Financing Authority, as expected, capitalized Interest will be 
more necessary to protect City ratepayers against higher rate increases required as a 
result of the loss of the incremental subsidy provided by the wholesale customers 
under the Contract. 

The capitalized Interest amounts are conservative in a different sense, however. It is 
assumed that interest will be capitalized at the bond rate. It Is the SFPUC's 
expectation that we will, use commercial paper or other short term instruments to 
fund a portion of construction costs. CP carries significantly lower interest rates. 
However, the SFPUC has chosen to assume the higher costs because it cannot be 
assured of access to the credit and liquidity markets for CP at all times. 
Nevertheless, to the extent CP is used, the SFPUC would need to issue fewer bonds 
than assumed by the LRFP. Note that RW Beck recommended the SFPUC capitalize 
interest for three rather than two years. The SFPUC believes that the use of CP 
mitigates against the need to increase the amount of capitalized interest assumed in 
the LRFP. 

h Impact of Proposition H or Subsequent Referenda: Proposition H effectively 
freezes rates at 1998 levels through fiscal year 2006. There remains the possibility 
of a similar measure taking effect in future years which would inhibit SFPUC's ability 
to raise rates to support bonds necessary to finance essential improvements to the 
system. 

h Alternative Scenarios using Charter Section 9.107 R&R Bonds without Voter 
Approval: There are some projects which, in our opinion, may be qualified as 
" reconstruction" projects and as such could be financed without voter approval 
pursuant to the Charter. (We have requested the City Attorney to formally define 
"reconstruction" projects as it relates to the Charter.) However, bonds can only be 
supported by an increase in rates, which cannot occur under the terms of Proposition 
H period. 

Fire Department AWSS System 

The Fire Department's Auxiliary Water Supply System (AWSS) is functionally independent of 
the SFPUC's water distribution system. The AWSS storage facilities - Twin Peaks Reservoir, 
Jones Street Tank and Ashbury Tank - are filled with potable water form the PUC system, 
however, once the water enters the AWSS system it is no longer potable. There are no 
other physical connections between the two systems. * 

S 

• 

I 



31 



JUL-03-20aa 17:33 FUCFINfiNCE Attachment I «1S 487 S258 P.0S/06 

Water Bond Measure (Fil£ 02-0910) -6- Page 6 of 6 July 3, 2002 

The AWSS system was conceived following the 1906 earthquake and fire. The AWSS system 
is designed to withstand higher water pressures and ground movement than the SFPUC's 
potable water system. In addition to the system's storage facilities, the AWSS can be 
supplied with salt water by the Fire Department's two pump stations or by fire boats 
through manifolds on the water front. 

The AWSS system does not cover the entire City. The system coverage is most dense in the 
area north of Mission Street and east of Van Ness Avenue. Where it is available, however, it 
is routinely used by the SFFD in lieu of, or as a complement to, the water supply available 
through the SFPUC's distribution system. The AWSS's larger diameter lines and higher 
pressures make It a more effective fire fighting tool. 

The vast majority of the work proposed in the CEP Is in the regional water system, local 
storage, and local transmission systems. Transmission lines convey water to and between 
storage facilities, and distribution lines convey water to customers. The Fire Department's 
low pressure hydrants are connected to the SFPUC's distribution lines. 

In summary,, the proposed QP, because of it emphasis on regional water supply and 
transmission, will not significantly effect, either positively or negatively, the performance or 
reliability of the Fire Department's AWSS. Nor will the CIP include improvements to the local 
water distribution system such that it would improve the reliability or performance of the 
AWSS. 



If you have any questions or desire additional information, please email me at 
wberrvOouc.sf.ca.us or call me at (415) 554-2457. 



32 



Attachment II 
Page 1 of 3 



San Francisco Public Utilities Commission 




MEMORANDUM 



DATE: July 10, 2002 

TO: Board of Supervisors' Budget Analyst 

FROM: Bill Berry, Assistant General Manager 

for Finance & Administration, SFPUC 

SUBJECT: Water Bond Measure (File 02-0910) 



cc: Patricia E. Martel, GM, SFPUC 



The following illustrates the projected debt service relating to the Water Enterprise if the 
entire amount of $1,628 billion of proposed bonds are issued. Attached are the numerical 
data that supports this table. 



Projected Water Debt Service 



ird non 




^ 


— , 140,000 - 
o 

o 




^ ' ■'•' ^1 


S 120,000 - 




^r 


a 100,000 - 

> 




w 


ot 80,000 - 




W 


» 60,000 - 




HT Proposed Bonds 


3 40,000 - 




■,.-,... :. ... ; . , ; . ' 


c 

< 20,000 - 


'■■■;-y ~ 


j^uiMMmMtMJMM^Aulhorized Bonds . 




•'.'• ' " '^fifi 


,& & g J? <N N -{?» J» JS £ $> #> & $> <$> # S 

,v ,r ,i? ,i? ,$> ,$> ,$> .«£ i ,v ,v ,v ,i? ,n? .$> 

« A ? <c A ^ <: A <t- <c A <c A ^ < A & << A « A O < A 



If you have any questions or desire additional information, please email me at 
wberry(apuc.sf.ca.us or call me at (415) 554-2457. 



33 



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34 



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35 



DATE: 

TO: 

FROM: 



Attachment III 



San Francisco Public Utilities Commission 



MEMO RAND If M 




July 3, 2002 

Board of Supervisors' Budget Analyst 

Bill Berry, Assistant General Manager 
for Finance & Administration, SFPUC 



cc: Patricia E. Martel, GM, SFPUC 



SUBJECT: Water Bond Measure (File 02-0910) 



The following table compares the current monthly water bills of San Francisco to other 
California water utilities. 



Comparison of Monthly Water Bills' 



Wfclnut Creek (CCWO) 

Dublin- San Ramon Sani Disl. 

San Diego 

Palo Alto 

E3MUD 

Hayward 

Fremont (ACWD) 

Sacramento 

San Jose 

Los Angeles 

San Francisco 

Santa Clara 



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SO 



S5 S10 S15 S20 S25 S30 S35 



'Comparisons among utility rota arc difficult, as some systems are subsidized by otluT tax receipts. 



If you have any questions or desire additional information, please email me at 
wberryia)Duc.sf.ca.us or call me at (415) 554-2457. 



Attachment IV 
Page 1 of 2 



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37 



Attachment IV 
Page 2 of 2 



FISCAL YEAR 2002/2003 CIP PROGRAM OBJECTIVES 

The CIP will achieve the following objectives in Fiscal Year 02/03: 

Program Planning: 

■ Complete Phase I of the Facilities Implementation Plan - model various alternative 
designs to determine constructability and related costs 

■ Initiate CIP Environmental Review Process - begin programmatic and project level 
EIR documentation to facilitate timely project implementation 

■ Establish Prioritization Procedures - implement annually to reflect current needs and 
changes in scope 

■ Identify and Prioritize Critical CIP Projects - facilitate the most critical projects 
moving ahead on a critical timeline 

• Develop Project Specific Request for Proposals (RFPs) for years 1 & 2 - procure 
specialty planning, design and construction management professional services 

■ Establish CIP Performance Measurements - measure program performance based 
upon budget, schedule, and operability 

Develop Internal Procedures: 

■ Create an Enterprise Work Breakdown Structure (WBS) - Program Manager will 
control project scope, schedule, and budget through Project Controls using a WBS to 
capture and report project information, and provide current information to stakeholders 

■ Develop Procedures for Updating the Annual CIP Budget - develop process to 
provide current budget and schedule information to the SFPUC, the Board of Supervisors 
and the Stakeholders 

■ Develop Change Order Control/Approval Process - manage contracts and track 
budget more effectively on a real time basis 

■ Develop Construction Management Procedures - standardize documentation and 
control practices for project managers to more effectively manage projects during 
construction 

■ Review Skills Inventory and Develop Staff Training Plan - based upon the assessment 
of skills and CIP requirements, utilize staff from SFPUC, DPW, and other City 
Departments in the fields of engineering, project controls, project management and 
construction management, and provide training as appropriate 

Develop and Implement Information Systems: 

" Select Project Control System - track scope of work, budget expenditures, schedules 
and resource needs to provide a comprehensive, accurate, and timely program report to 
accommodate an enlarged database 

• Procure Project Control System - acquire software license agreement and training 

" Develop Project Control System Implementation Plan - develop a phased installation 
plan, to be implemented by the CIP staff, beginning with a pilot project to test and refine 
the Project Control System 

• Procure Electronic Timecard System - this new system will replace the daily, manual 
timecards of engineering staff, by tracking project phases and engineering disciplines, to 
ensure more detailed, and timely reporting of labor costs 



38 



Attachment V 
Page 1 of 2 



San Francisco Public Utilities Commission - Capital Improvement Program 

Local Water Projects 











SFPOC 




Start 
Project 


Construction 
Start 


In Service 
Date 


Proposal 


Project TrtJe 


Cost 2003 $ 


Non-R&R Projects 










Lincoln Way Transmission Line 


2003 


2005 


2007 


$11,17S 


Groundwater Projects 


2003 


2005 


2007 


13,706 


Recycled Water 


2003 


2007 


2010 


102,735 


Cross Town Transmission Main 


2005 


2007 


2009 


17,415 


Sunset Circulation Improvements 


2005 


2007 


2009 


6,771 


Fire Protection at CDD 


2006 


2008 


2008 


1,713 


Key Motorized and Other Critical Valves 


2006 


2008 


2009 


11,945 


Noe Valley Transmission Main Ph2 


2006 


2009 


2010 


8,736 


SEWPCP - Water reclamation 


2008 


2010 


2011 


7,194 


New Northwest Reservoir 


2008 


2010 


2011 


29,594 


Lake Merced Pump Station Essential Upgrade 


2009 


2012 


2014 


59,144 


Total Non-R&R Projects 


$270,128 


R&R Projects with Construction Starting Before 10/2006 










Pump Station Upgrades (Summit) 


2003 


2005 


2006 


$4,914 


Pump Station Upgrades (Crocker Amazon) 


2003 


2005 


2006 


2,829 


Pump Station Upgrades (Lincoln Park) 


2003 


2005 


2007 


1,942 


Res Rehab and Seismic Upgrade Summit 


2003 


2005 


2007 


16,190 


Tank Rehab and Seismic Upgrade Lincoln Park 


2003 


2005 


2007 


1,698 


Tank Rehab and Seismic Upgrade Le-Grande 


2003 


2004 


2005 


2,071 


Total R&R Projects with Construction Starting Before 10/2006 


$29,644 


R&R Projects w/ Construction Starting After 10/2006 










Pump Station Upgrades (Palo Alto) 


2004 


2007 


2008 


$1,857 


Pump Station Upgrades (Sky View - Aqua Vista)) 


2004 


2007 


2008 


1,373 


Pump Station Upgrades (Forest Knolls) 


2004 


2007 


2008 


2,466 


Res Rehab and Seismls Upgrade Potrero H 


2004 


2006 


2007 


9,584 


Tank Rehab and Seismic Upgrade Portero Heights 


2004 


2006 


2007 


2,049 


Pump Station Upgrades (Mount Davidson) 


2005 


2008 


2009 


1,618 


Tank Rehab and Seismic Upgrade Forest Knolls 


2005 


2006 


2008 


1,810 


Vehicle Service & Facility Upgrade 


2006 


2008 


2009 


4,177 


North University Mound System Upgrade 


2006 


2008 


2010 


18,351 


Pump Station Upgrades (McLaren Park) 


2006 


2009 


2010 


5,038 


Pump Station Upgrades (Potrero Heights) 


2006 


2008 


2009 


1,764 


Pump Station Upgrades (Forest Hill) 


2006 


2008 


2009 


1,529 


Tank Rehab and Seismic Upgrade Mount Davidson 


2006 


2008 


2009 


1,705 


Tank Rehab and Seismic Upgrade Forest Hill 


2006 


2008 


2009 


2,270 


Tank Rehab and Seismic Upgrade Hunters Point 


2006 


2007 


2009 


3,459 


Res Rehab and Seismic Upgrade Hunters Point 


2006 


2008 


2009 


5,832 


Reservoir Rehabilitation Stanford Heights 


2006 


2007 


2009 


9,519 


Total R&R Projects w/ Construction Starting After 10/2006 


$74,401 


R&R Projects Starting After 10/2006 










Pump Station Upgrades (LeGrande) 


2006 


2009 


2010 


$2,332 


Pump Station Upgrades (Vista Francisco) 


2006 


2009 


2010 


1,611 


Tank Rehab and Seismic Upgrade McLaren #1 


2006 


2009 


2010 


6,899 


Tank Rehab and Seismic Upgrade McLaren #2 


2006 


2009 


2010 


6,854 


Fulton @ 6th Ave 30" Main Replacement 


2007 


2009 


2011 


3,578 


Res Rehab and Seismic Upgrade Sutro 


2009 


2010 


2012 


22,407 


Total R&R Projects Starting After 10/2006 


$43,681 


Total 2003 $ Project Costs 








$417,854 


Total Escalated Project Coats 








$503,668 


Total Bond Sire (including, contingency and financing costs) 








$714,938 



39 



Attachment V 
Page 2 of 2 



San Francisco Public Utilities Commission - Capital Improvement Program 
Local Share of Regional Water Projects 











SFPOC 




Start 
Project 


Construction 
Start 


In Service 
Date 


Proposal 


Project Title 


Cost 2003 $ 


Non-R&R Projects 










Alameda Creek Fishery Enhancement 


2003 


2004 


2007 


$2,110 


Calaveras Dam Replacement 


2003 


2006 


2009 


47,025 


Crystal Springs Bypass Tunnel 


2003 


2007 


2009 


15,513 


Irvington Tunnel Alternatives 


2003 


2006 


2009 


45,122 


Pipeline Repair Plan & Readiness Imp 


2003 


2003 


2004 


1,056 


Enlarge Sunol Treatment Capacity to 240 mgd 


2004 


2007 


2009 


25,699 


SJPL No4 New 


2004 


2009 


2011 


122,698 


Hetch Hetchy Advanced Disinfection - UV 


2006 


2010 


2011 


15,877 


Bay Division Pipeline - Hydraulic Capacity Upgrade 


2006 


2010 


2013 


78,052 


BDPL Nos 3 & 4 Cross Connections 


2006 


2009 


2010 


3,440 


Lawrence Livermore Filtration 


2008 


2010 


2011 


565 


Standby Power Facilities,Various Locations 


2010 


2012 


2013 


1,724 


Installation of SCADA System (Phase II) 


2010 


2013 


2014 


9,002 


San Andreas *3 P/L Installation 


2010 


2013 


2014 


7,940 


Sunol Quarry Reservoirs 


2011 


2013 


2014 


2,790 


Water System Automation (Hetch Hetchy) 


2012 


2014 


2015 


406 


Total Non-R&R Projects 


$379,018 


R&R Projects with Construction Starting Before 10/2006 










SVWTP - New Treated Water Reservoir 


2003 


2006 


2007 


$14,728 


San Antonio Pump Station / Emergency Power 


2003 


2005 


2005 


1,155 


Tesla Portal Disinfection Facility 


2004 


2006 


2008 


3,296 


HTWTP Short Term Improvements - Ptiase A 


2004 
D06 


2006 


2007 


939 


Total R&R Projects with Construction Starting Before 10/2 


$20,119 


R&R Projects with Construction Starting After 10/2006 










Seismic Upgrade Of BDPL's @Hayward Fault 


2006 


2009 


2010 


$13,168 


Adit Leak Repairs( Crystal Springs / Calaveras Res) 


2006 


2007 


2007 


688 


Crystal Springs PS and CS-SA PL Capacity 


2006 
)6 


2009 


2011 


18,236 


Total R&R Projects with Construction Starting After 10/20 


$32,092 


R&R Projects Starting After 10/2006 










BDPL #1 & *2 Repair of Caisson & Pipe Bridge 


2007 


2011 


2013 


$5,928 


U. Mound Rsvr - Seismic Upgrade/Rehab (North Basin) 


2007 


2010 


2011 


20,225 


HTWTP Short Term Improvements Ptiase B 


2008 


2011 


2012 


3,159 


Lower Crystal Springs Dam Improvements 


2009 


2012 


2014 


5,295 


Sunset Rsvr - Seismic Upgrade/Rehab (North Basin) 


2009 


2012 


2014 


14,062 


HTWTP Long-Term Improvements 


2011 


2014 


2016 


11,722 


Cross Connection Controls 


2012 


2014 


2015 


1,221 


Early Intake Res-Resurface Dam (Hetch Hetcty) 


2012 


2014 


2015 


397 


Early Intake Res-Spillway +AdJ. Weir( Hetch Hetchy) 


2012 


2014 


2015 


510 


Pulgas Reservoir Rehabilitation 


2012 


2015 


2016 


4,946 


Capuchino Valve Lot capacity Improvements 


2012 


2015 


2016 


521 


Mountain Tunnel Lining (Hetch Hetchy) 


2012 


2014 


2015 


770 


Crystal Springs 2 PL Replacement (In City) 


2012 


2013 


2015 


18,496 


Foothill Tunnel Repairs (Hetch Hetchy) 


2012 


2014 


2015 


957 


Total R&R Projects Starting After 10/2006 


$88,208 


Total 2003 * Project Costs 








$519,437 


Total Escalated Project Costs 








$643,336 


Total Bond Size (including contigency and financing costs) 








$913,154 



40 




City and County of San Francisco 

^Meeting Minutes 

finance Committee 



City Hall 

1 Dr. Carlton B 

Goodlett Place 

San Francisco, CA 

94102-4689 



Wednesday, July 24, 2002 



12:30 PM 

Regular Meeting 



City Hall, Room 263 



Members Present: Aaron Peskin, Chris Daly, Sophie Maxwell. 



Meeting Convened 

The meeting convened at 12:37 p.m. 

REGULAR AGENDA 



[All Committees] 

Government Document Section 

Main Library 



021121 [Business Tax] 

Supervisor McGoldrick 

Motion submitting the San Francisco Business Tax Reform Ordinance 2002 to the qualified electors of the City 

and County of San Francisco, at the November 5, 2002 general municipal election. 

6/17/02. RECEIVED AND ASSIGNED to Rules and Audits Committee. 

6/19/02, TRANSFERRED to Finance Committee. (6/26/02 - Referred to Small Business Commission for comment and recommendation.) 

7/17/02, AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. Heard in Committee. Speakers: Supervisor Jake 

McGoldrick; Harvey Rose. Budget Analyst; Edward Harrington, Controller; Ken Cleveland, Building Owners and Managers Association; 

Rosie Blyers; Rebecca Miller, Political Director, Local 790; Amy Harrington, SEIU. Local 250; John Avalos, Coleman Advocates for 

Children and Youth, Janan New, Director, San Francisco Apartment Association; Michael Sweet; Nathan Nayman, Executive Director, 

Committee on Jobs; Theodore Lakey, Deputy City Attorney. 

Amendment of the Whole, as presented by Supervisor McGoldrick, adopted. 

Motion, to be sponsored by Supervisor Daly, prepared in Committee. See File 021292. 

Continued to 7/24/02. 

7/17/02, CONTINUED. 

Heard in Committee. Speakers: Supervisor McGoldrick; Supervisor Peskin; Ed Harrington, Controller; 
Supervisor Daly, Supervisor Hall; Steven Cornell, President, Small Busienss Commission; Margaret Brodkin, 
Coleman Advocates for Children; Jim Mathias, S. F. Chamber of Commerce; Julie Van Nostern, Deputy City 
Attorney; Amy Laitinen, SEIU; John Cope, Hotel Council of S. F.; Todd Robinette, Equity Office Properties; 
Nathan Nayman, Executive Director, Committee on Jobs; Scott Hauge, Small Business Advocates; Clifford 
Waldeck; Howard Wallace, Local 250; Garret Jenkins; Marjie O'Drisscal; Rebecca Vilkomerson, People's 
Budget; John Crapo, Director, S. F. Center for Economic Development; Jim Fabris, S. F. Association of 
Realtors; Dorji Roberts, Deputy City Attorney; Rolph Muller; Lane Andersson, Boston Properties; Larry 
Valentine; Michael Freeman, McCarthy Cook & Company; Patricia Bresslin, Golden Gate Restaurant 
Association; Ken Cleveland, Building Owners & Managers Association; Chris Boman; Roger Bazeley, 
Theodore Brown. i-M-nT" 

TABLED by the following vote: DOCUMENTS DEPI. 

Ayes: 3 - Peskin, Daly, Maxwell 

JUL 2 9 2002 

SAN FRANCISCO 
PUBLIC LIBRARY 



City and County of San Francisco 



Printed at 11:30 AM on 7125102 



Finance Committee Meeting Minutes July 24, 2002 



021097 [Business Tax] 

Supervisor McGoldrick 

Ordinance amending the Business and Tax Regulations Code to: (1) enact a new Article 12-A-l (Gross 
Receipts Tax Ordinance) to impose a gross receipts tax on persons engaging in business in San Francisco as a 
lessor of real estate; (2) amend Article 12-A (Payroll Expense Tax Ordinance) to (i) reduce businesses' taxable 
payroll expense by the amount of payroll expense attributable to their San Francisco business activities taxed 
under Article 12-A-l (Gross Receipts Tax Ordinance), (ii) conform Article 12-A (Payroll Expense Tax 
Ordinance) with the enactment of Article 12-A-l (Gross Receipts Tax Ordinance) and amendments to Article 6 
(Common Administrative Provisions), (iii) repeal the Enterprise Zone Tax Credit set forth in Section 906A, (iv) 
repeal the $500 surplus business tax revenue credit set forth in Section 906E, and (v) consolidate exemptions, 
definitions and other administrative provisions, as amended, that apply to Article 12-A (Payroll Expense Tax 
Ordinance) and other Articles of the Business and Tax Regulations Code, and place them in Article 6 (Common 
Administrative Provisions); (3) amend Article 12 (Business Registration Ordinance) to conform business 
registration requirements with the enactment of Article 12-A-l (Gross Receipts Tax Ordinance) and 
amendments to Article 12-A (Payroll Expense Tax Ordinance) and Article 6 (Common Administrative 
Provisions); (4) amend Article 6 (Common Administrative Provisions) to (i) clarify common administrative 
provisions and conform them with the enactment of Article 12-A-l (Gross Receipts Tax Ordinance) and 
amendments to Article 12-A (Payroll Expense Tax Ordinance) and Article 12 (Business Registration 
Ordinance), (ii) consolidate exemptions, definitions and other administrative provisions that apply to Article 12- 
A (Payroll Expense Tax Ordinance), Article 12-A-l (Gross Receipts Tax Ordinance), Article 12 (Business 
Registration Ordinance) and other Articles of the Business and Tax Regulations Code, and (iii) eliminate the 
Board of Review; and (5) amend Section 501 of Article 7 to clarify the definition of "Permanent Residents" 
exempt from the tax on the transient occupancy of hotel rooms. 

6/17/02. ASSIGNED UNDER 30 DAY RULE to Rules and Audits Committee, expires on 7/17/2002 

6/19/02. TRANSFERRED to Finance Committee. (6/26/02 - Referred to Small Business Commission for comment and recommendation.) 

7/17/02. AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. Heard in Committee. Speakers: Supervisor Jake 

McGoldrick; Harvey Rose, Budget Analyst; Edward Harrington, Controller. Ken Cleveland, Building Owners and Managers Association. 

Rosie Blyers; Rebecca Miller, Political Director, Local 790; Amy Harrington, SEIU, Local 250; John Avalos, Coleman Advocates for 

Children and Youth. Janan New, Director, San Francisco Apartment Association; Michael Sweet; Nathan Nayman. Executive Director. 

Committee on Jobs; Theodore Lakey, Deputy City Attorney. 

Amendment of the Whole, as presented by Supervisor McGoldrick, adopted. 

Ordinance, to be sponsored by Supervisor Daly, prepared in Committee. See File 021294. 

Continued to 7/24/02. 

7/17/02. CONTINUED. 

Heard in Committee. Speakers: Supervisor McGoldrick; Supervisor Peskin; Ed Harrington, Controller; 
Supervisor Daly, Supervisor Hall; Steven Cornell, President, Small Busienss Commission; Margaret Brodkin, 
Coleman Advocates for Children; Jim Mathias, S. F. Chamber of Commerce; Julie Van Nostern, Deputy City 
Attorney; Amy Laitinen, SEIU; John Cope, Hotel Council ofS. F.; Todd Robinette, Equity Office Properties; 
Nathan Nayman, Executive Director, Committee on Jobs; Scott Hauge, Small Business Advocates; Clifford 
Waldeck; Howard Wallace, Local 250; Garret Jenkins; Marjie O'Drisscal; Rebecca Vilkomerson, People's 
Budget; John Crapo, Director, S. F. Center for Economic Development; Jim Fabris, S. F. Association of 
Realtors; Dorji Roberts, Deputy City Attorney; Rolph Muller; Lane Andersson, Boston Properties; Larry 
Volentine; Michael Freeman, McCarthy Cook & Company; Patricia Bresslin, Golden Gate Restaurant 
Association; Ken Cleveland, Building Owners & Managers Association; Chris Botnan; Roger Bazeley, 
Theodore Brown. 
TABLED by the following vote: 

Ayes: 3 - Peskin, Daly, Maxwell 



City and County of San Francisco 2 Printed at 1 1 :30 AM on 7/25/02 



Finance Committee Meeting Minutes j u [y 24, 2002 



021292 [Business Tax] 
Supervisor Daly 

Motion submitting the San Francisco Business Tax Reform Ordinance 2002 to the qualified electors of the City 

and County of San Francisco, at the November 5, 2002 general municipal election. 

7/17/02, PREPARED IN COMMITTEE AS A MOTION. Continued to 7/24/02. 

7/17/02, CONTINUED. 

7/17/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Supervisor McGoldrick; Supervisor Peskin; Ed Harrington, Controller; 
Supervisor Daly, Supervisor Hall; Steven Cornell, President, Small Busienss Commission; Margaret Brodkin, 
Coleman Advocates for Children; Jim Mathias, S. F. Chamber of Commerce; Julie Van Nostern, Deputy City 
Attorney; Amy Laitinen, SEIU; John Cope, Hotel Council ofS. F.; Todd Robinette, Equity Office Properties; 
Nathan Nayman, Executive Director, Committee on Jobs; Scott Hauge, Small Business Advocates; Clifford 
Waldeck; Howard Wallace, Local 250; Garret Jenkins; Marjie O'Drisscal; Rebecca Vilkomerson, People's 
Budget; John Crapo, Director, S. F. Center for Economic Development; Jim Fabris, S. F. Association of 
Realtors; Dorji Roberts, Deputy City Attorney; Rolph Muller; Lane Andersson, Boston Properties; Larry 
Volentine; Michael Freeman, McCarthy Cook & Company; Patricia Bresslin, Golden Gate Restaurant 
Association; Ken Cleveland, Building Owners & Managers Association; Chris Boman; Roger Bazeley, 
Theodore Brown. 

Amendment of the Whole; Supervisor Daly withdrew his sponsorship; Supervisor McGoldrick added as 
sponsor. 
AMENDED, AN AMENDMENT OF THE WHOLE BEARING SAME TITLE. 

Continued to July 31, 2002. 

CONTINUED AS AMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



City and County of San Francisco 3 Printed at 11:30 AM on 7/25/02 



Finance Committee Meeting Minutes July 24, 2002 



021294 [Business Tax] 
Supervisor Daly 

Ordinance amending the Business and Tax Regulations Code to: (1) enact a new Article 12-A-l (Gross 
Receipts Tax Ordinance) to impose a gross receipts tax on persons engaging in business in San Francisco as a 
lessor of real estate; (2) amend Article 12-A (Payroll Expense Tax Ordinance) to (i) reduce businesses' taxable 
payroll expense by the amount of payroll expense attributable to their San Francisco business activities taxed 
under Article 12-A-l (Gross Receipts Tax Ordinance), (ii) conform Article 12-A (Payroll Expense Tax 
Ordinance) with the enactment of Article 12-A-l (Gross Receipts Tax Ordinance) and amendments to Article 6 
(Common Administrative Provisions), (iii) repeal the $500 surplus business tax revenue credit set forth in 
Section 906E, and (iv) consolidate exemptions, definitions and other administrative provisions, as amended, 
that apply to Article 12-A (Payroll Expense Tax Ordinance) and other Articles of the Business and Tax 
Regulations Code, and place them in Article 6 (Common Administrative Provisions); (3) amend Article 12 
(Business Registration Ordinance) to conform business registration requirements with the enactment of Article 
12-A-l (Gross Receipts Tax Ordinance) and amendments to Article 12-A (Payroll Expense Tax Ordinance) 
and Article 6 (Common Administrative Provisions); (4) amend Article 6 (Common Administrative Provisions) 
to (i) clarify common administrative provisions and conform them with the enactment of Article 12-A-l (Gross 
Receipts Tax Ordinance) and amendments to Article 12-A (Payroll Expense Tax Ordinance) and Article 12 
(Business Registration Ordinance), (ii) consolidate exemptions, definitions and other administrative provisions 
that apply to Article 12-A (Payroll Expense Tax Ordinance), Article 12-A-l (Gross Receipts Tax Ordinance), 
Article 12 (Business Registration Ordinance) and other Articles of the Business and Tax Regulations Code, and 
(iii) eliminate the Board of Review; and (5) amend Section 501 of Article 7 to clarify the definition of 
"Permanent Residents" exempt from the tax on the transient occupancy of hotel rooms. 
7/17/02, RECEIVED AND ASSIGNED to Finance Committee. 
7/17/02, PREPARED IN COMMITTEE AS AN ORDINANCE. Continued to 7/24/02. 
7/17/02, CONTINUED. 

Heard in Committee. Speakers: Supervisor McGoldrick; Supervisor Peskin; Ed Harrington, Controller; 
Supervisor Daly, Supervisor Hall; Steven Cornell, President, Small Busienss Commission; Margaret Brodkin, 
Coleman Advocates for Children; Jim Mathias, S. F. Chamber of Commerce; Julie Van Nostern, Deputy City 
Attorney; Amy Laitinen, SEIU; John Cope, Hotel Council ofS. F.; Todd Robinette, Equity Office Properties; 
Nathan Nayman, Executive Director, Committee on Jobs; Scott Hauge, Small Business Advocates; Clifford 
Waldeck; Howard Wallace, Local 250; Garret Jenkins; Marjie O'Drisscal; Rebecca Vilkomerson, People's 
Budget; John Crapo, Director, S. F. Center for Economic Development; Jim Fabris, S. F. Association of 
Realtors; Dorji Roberts, Deputy City Attorney; Rolph Muller; Lane Andersson, Boston Properties; Larry 
Volentine; Michael Freeman, McCarthy Cook & Company; Patricia Bresslin, Golden Gate Restaurant 
Association; Ken Cleveland, Building Owners & Managers Association; Chris Boman; Roger Bazeley, 
Theodore Brown. 

Amendment of the Whole, Supervisor Daly withdrew his sponsorship; Supervisor McGoldrick added as 
sponsor. 
AMENDED, AN AMENDMENT OF THE WHOLE BEARING SAME TITLE. 

Continued to July 31, 2002. 
CONTINUED AS AMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



City and County of San Francisco 4 Printed at 11:30 AM on 7/25/02 



Finance Committee 



Meeting Minutes 



July 24, 2002 



011178 [Motor Vehicle for Hire Permit Filing Fees and License Fees] 

Ordinance amending Sections 2.26.1 and 2.27.1 of the Police Code to amend schedules for motor vehicle for 

hire permit filing fees and license fees. (Taxi Commission) 

8/2/01 , RECEIVED AND ASSIGNED to Finance Committee. 

5/1/02. CONTINUED. Speakers: None. 

Continued to 5/8/02. 

5/8/02, RECOMMENDED Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Theodore Lakey, Deputy City Attorney; 

Naomi Little, Executive Director, Taxicab Commission. 

5/8/02, REFERRED. Transferred to Budget Committee. 

6/25/02, MEETING RECESSED Heard in Committee. Speakers: Bruce Oka; Jim Kennedy; Mark Newburg; Ann; Manuel; Joseph 

Fleischman; Howard Green; Paul Gillesppi; Jim Nakamora; Naomi Little, Taxicab Commission; Supervisor Ammiano. Supervisor 

McGoldrick; Supervisor Yee. 

Recessed to meeting of June 27, 2002. 

6/27/02, AMENDED, AN AMENDMENT OF THE WHOLE BEARING SAME TITLE Heard in Committee. Speakers: Naomi Little. 

Executive Director, Taxicab Commission; Ruach Graffis; Charles; Jim Nakamora; John Bardis; Supervisor Ammiano. 

Amendment of the Whole further increasing fees. To Be transferred to Finance Committee to be heard on July 17, 2002. 

6/27/02, CONTINUED TO CALL OF THE CHAIR AS AMENDED. 

7/1/02, TRANSFERRED to Finance Committee. 

7/17/02, AMENDED, AN AMENDMENT OFTHE WHOLE BEARING SAME TITLE. Heard in Committee. Speakers: Harvey Rose, 

Budget Analyst: Naomi Little, Executive Director, Taxicab Commission; Mark Gruberg, United Taxicab Workers; Ruach Graffis, United 

Taxicab Workers; Richard Ow; Joseph Fleischman, Communications Director, PDA, Walter Derby; Male Speaker; James Kennedy; 

Charles Rathbone; Henry Kim, Executive Director, San Francisco Taxi Association; Rob Walter; Jim Nakamura; Theodore Lakey, 

Deputy City Attorney; Ben Rosenfield, Mayor's Budget Office. 

Continued to 7/24/02. 

7/17/02, CONTINUED. 

Heard in Committee. Speakers: Rusach Graffis, United Taxicab Workers; Supervisor Daly; Ted Lakey, 
Deputy City Attorney. 
Continued to July 31, 2002. 
CONTINUED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



020536 [Reserved Funds, Human Services Department] 

Hearing to request release of reserved funds, Department of Human Services (File 020192: Ordinance 59-02), 
in the amount of $23,500 for the Homeless Prenatal Program. (Human Services Department) 
7/15/02. RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Rebecca Vilkomerson; Martha Ryan, 
Executive Director, Homeless Prenatal Program; Lisa Smith. 
Request for release of $23,500, approved. 
APPROVED AND FILED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



021199 [Contracting out Paratransit Services] 

Resolution concurring with the controller's certification that paratransit services for the Municipal 

Transportation Agency can be practically performed by a private contractor at a lower cost than by city and 

county employees. (Municipal Transportation Agency) 

7/10/02, RECEIVED AND ASSIGNED to Finance Committee 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Supervisor Peskin. 

Amended on page 1, lines 3 and 18, insert "rectroctively" to reflect the contract beginning FY 2002-2003. 

AMENDED. 



City and County of San Francisco 



Printed at 11:30 AM on 7/2S/02 



Finance Committee 



Meeting Minutes 



July 24, 2002 



Resolution concurring retroactively, with the controller's certification that paratransit services for the Municipal 
Transportation Agency can be practically performed by a private contractor at a lower cost than by city and 
county employees. (Municipal Transportation Agency) 
RECOMMENDED AS AMENDED., by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



021137 [Contracting out of Facility Security Services] 

Resolution concurring with the Controller's certification that facility security services for Municipal 
Transportation Agency can be practically performed by a private contractor at a lower cost than by City and 
County employees. (Municipal Transportation Agency) 

(Public Benefit Recipient) 

7/1 1/02, RECEIVED AND ASSIGNED to Finance Committee 
Heard in Committee. Speakers: Harvey Rose, Budget Analyst. 
RECOMMENDED., by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



021 188 [Contracting out Shuttle Bus Service] 

Resolution approving the Controller's certification that shuttle bus services for San Francisco International 

Airport's Long-Term Parking Lot, the employee garage and surface Lot DD can practically be performed by 

private contractor at a lower cost than if work were performed by City and County employees. (Airport 

Commission) 

7/10/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst. 
Amended on page 1, line 3, insert "retroactively". 
AMENDED. 

Resolution approving retroactively, the Controller's certification that shuttle bus services for San Francisco 
International Airport's Long-Term Parking Lot, the employee garage and surface Lot DD can practically be 
performed by private contractor at a lower cost than if work were performed by City and County employees. 
(Airport Commission) 

RECOMMENDED AS AMENDED., by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



ADJOURNMENT 

The meeting adjourned 3:51 p.m. 



City and County of San Francisco 



Printed at 11:31 AM on 7/25/02 



0.25 



*y»x 




[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 

OF SAN FRANCISCO 






CITY AND COUNTY 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



July 18, 2002 



TO: ^Finance Committee 

FROM: -Budget Analyst 

SUBJECT: July 24, 2002 Finance Committee Meeting 

Item 5 File 01-1178 



DOCUMENTS DEPT. 
JUL 2 2 2002 

SAN FRANCISCO 
PUBLIC LIBRARY 



Note: The proposed fee schedule was amended by the Finance Committee and the 
item was continued at the Committee's meeting of July 17, 2002. 



Department: 
Item: 



Description: 



Taxicab Commission 

Ordinance amending Sections 2.26.1 and 2.27.1 of the 
Police Code to amend the schedules for Motor Vehicles for 
Hire of the one-time permit application filing fees, other 
related fees and annual license fees and transferring 
responsibility for the administration the Motor Vehicles 
for Hire Program from the Police Department's Taxicab 
Detail to the Taxicab Commission. 

In November of 1998, San Francisco voters approved a 
Charter Amendment that created the Taxicab 
Commission (Proposition D) to administer the Motor 
Vehicles for Hire permits, fees and licensing program. 
Police Code Section 1076 (a) defines Motor Vehicles for 
Hire as every type, kind and class of privately owned 
motor-propelled passenger-carrying vehicles for hire over 
which the City may exercise jurisdiction, excluding 
vehicles licensed in other jurisdictions, limousines, 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 



funeral limousines, buses, private ambulances or rail 
vebicles. 

The proposed ordinance would (a) transfer responsibility 
for the administration the Motor Vehicles for Hire 
Program from the Police Department's Taxicab Detail to 
the Taxicab Commission in accordance with Charter 
Section 4.133; and (b) amend Sections 2.26.1 and 2.27.1 of 
the Police Code to modify the amount of the fees charged 
under the Motor Vehicles for Hire Program. The permit 
apphcation filing fees are currently collected on a one- 
time basis only while other related fees are collected when 
applicable, for example each time a Medallion is lost, by 
the Police Department. The annual license fees are 
collected by the Treasurer/Tax Collector's Office. 

In accordance with Police Code Section 1087, all revenues 
generated from Motor Vehicles for Hire fees are deposited 
in the Taxicab Enforcement Fund and such funds can 
only be used for the capital and operating costs related to 
the Motor Vehicles for Hire permit and license program. 
Capital costs include vehicles used for auditing and 
enforcement purposes and operating costs include 
personnel expenses, materials and supplies and related 
costs. All expenditures made from the Taxicab 
Enforcement Fund are subject to appropriation approval 
by the Board of Supervisors. 

As stated above, during the Budget Committee's 
consideration of the Taxicab Commission's proposed FY 
2002-2003 budget, an amended version of the proposed 
fee ordinance was submitted to the Budget Committee. 
The amended ordinance changed the proposed fees and, 
overall, reduced projected FY 2002-2003 fee revenue by 
$117,300, from $1,445,250 to $1,327,950. Also at that 
time, the Taxicab Commission's proposed FY 2002-2003 
expenditure budget of $1,445,250 was reduced by the 
Budget Committee by $117,300 to $1,327,950 to conform 
to the amended schedule of fees and reduced revenue 
estimate. Attachment I, provided by the Taxicab 
Commission, shows the current fees, previously proposed 
fees and currently proposed fees for 12 permit application 
filing fees and other related fees and eight annual license 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

2 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 



fees for Motor Vehicles for Hire. These fees were last 
revised in April of 1999 (File 98-1443). 

Attachment II, also provided by the Taxicab Commission, 
details the specific expenditure reductions to the Taxicab 
Commission's proposed FY 2002-2003 budget to reduce 
proposed expenditures by the $117,300 amount of the 
reduced revenues that would result from the amended 
version of the proposed ordinance. The Budget Committee 
approved the reductions to the Taxicab Commission's 
budget and recommended the reduced Taxicab 
Commission budget to the Board of Supervisors. 



Recommendations: Approve the proposed ordinance. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

3 



ni_ LdL 1 1111 till L. 



Amended Proposed Taxi Fee Increase and Revenue Projections 
2002-2003 



6/27/02 







Original Proposed Fee 2002-2003 


New Proposed Fee 2002-2003 




Permit Type 


Current 
Fee 2002 


Original 

Proposed 

Fee 2002- 

2003 


Original 
Proposed 

Fee vs. 
Current Fee 


% Increase 
Original 
Proposed 

Fee vs. 
Current Fee 


New 
Proposed 
Fee 2002- 

2003 


Original 

Proposed 

r ee vs. New 

Proposed 

Fee 


New 
Proposed 

Fee vs. 
Current Fee 


% Increase 

New 

Proposed 

vs. Current 

Fee 


o 
Q 


Driver 
Applications 


S65 


$65 


$0 


0% 


$65 


$01 $0 


0% 


Driver 
Renewals 


$40 


$40 


$0 


0% 


$45 


■ 

. ■ ' $5 


$5 


13% 






















a 

n 
Q. 

E 
o 
u 

a 

O 

■ 
■n 


X 

1 

a. 


Permit 
Holder 
Applications 


$450 


$550 


$100 


22% 


$550 


$0 


$100 


22% 


Permit 
Holder 
Renewals 


$330 


$625 


$295 


89% 


$475 


($150) 


$145 


44% 




















Ramped 
Taxicab 
Applications 


$325 


$100 


($225) 


-69% 


$100 


$0 


($225) 


-69% 


Kampea 
Taxicab 
Renewals 


$175 


$100 


($75) 


-43% 


$100 


$0 


($75) 


-43% 






















c 
n 
u 

a 
a 
< 

< 


PCN 
Applications 


$200 


$225 


$25 


13% 


$300 


$75 


$100 


50% 


n 

n 

.■= u 

|1 

a 2 
o 

z 


Color 

Scheme 

Change 


$125 


$150 


$25 


20% 


$250 


$100 


$125 


100% 


Lost 
Medallions 


$150 


$150 


$0 


0% 


$150 


$0 


$0 


0% 


Metal 
Medallions 


$25 


$25 


$0 


0% 


$30 


. $5 


$5 


20% 


















IA 

s 

» 
a 
E 
o 
(J 

J3 

a 
U 


New Color Scheme Application 














1 to 5 

Medallions 


$500 


$500 


$0 


0% 


$750 


$250 


$250 


50% 


6 to 15 
Medallions 


$1,000 


$1,000 


$0 


0% 


$1,500 


$500 


$500 


50% 


16 to 49 

Medallions ' $2,000 


$2,000 


$0 


0% 


$3,000 


$1,000 


$1,000 


50% 


50 or more 
Medallions 


$2,500 


$2,500 


$0 


0% 


$3,750 


S1.25C 


$1,250 


50% 


















Color Scheme Renewals 
















1 to 5 

Medallions 


$50C 


$50C 


$C 


0% 


$50C 


$C 


$C 


0% 


6 to 15 

Medallions 


$1,00C 


$1,00C 


$C 


0°/c 


$1,00C 


$c 


$C 


0% 


16 to 49 
Medallions 


$2,00C 


$2,00C 


$C 


0% 


$2,00C 


$c 


$C 


0% 


50 or more 

Medallions 


$2,50C 


S2,50C 


$c 


0°/c 


$2,50C 


| $c 


$c 


0% 






















n 
a 

5 


Dispatch 

Service 

Application 


S2.50C 


S2.50C 


$( 


0°/ 


$2,50C 


$c 


$c 


0% 


uispatcn 

Service 

Renewals 


S2.50C 


$2,50( 


) $c 


0°/ 


$2,50C 


$c 


$c 


0% 




Total 
Revenue 


$1,040,17. 


j $1,445,25 


) $405,07. 




$1,329,25( 


($116,000 


$289,07; 





Attachment II 



Reductions to Taxicab Commission Budget 
Per New Proposed Fee Increase 6/27/02 

• Per further discussions regarding the Taxicab Commission Fee Increases, I am submitting an 
amended fee schedule with the following amendments to the Taxicab Commission budget. 

Reductions in the total of $117,300 Include: 

.75 FTE of class 1840, Junior Management Analyst in the amount of $41 ,085 

.5 FTE of class 1842, Management Analyst in the amount of $31,106 

$17, 776 in corresponding fringes 

$1,333 in Professional and Contract Sen/ices 

$26,000 in equipment for 1 car 



Safaries §j§ 



'<mmm 



Class 



FTE 



Reductions 



1840 



-0.75 



(41,085) 



1842 



-0.5 



(31.106) 



Subtotal 



(72,191) 



Fringe 



(17,776) 



i^otaTSala'ry^FjTffgelf 



m^sm^em 



Non-Salary 



Professional and Contract 



(1,333) 



Capital/ Equiptment 



(26,000) 



m^owwdmsa&fygm 



mmmmzm 



Jotal ,. ~ 4531 
LReductions/Savings^<i{^ 



WSgg&M 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 



Item 6 - File 02-0536 

Department: 

Item: 

Amount: 
Source of Funds: 
Description: 



Human Services 

Hearing to consider the release of reserved funds in the 
amount of $23,500 for the Homeless Prenatal Program. 

$23,500 

Fiscal Year 2001-2002 General Fund Reserve 

On April 22, 2002, the Board of Supervisors approved an 
ordinance appropriating $47,000 from the General Fund 
Reserve to the Department of Human Services (DHS), 
placing on reserve $23,500, to expand an existing contract 
with the Homeless Prenatal Program, a non-profit 
organization that provides street-based outreach services 
to homeless families, including pregnant and post-partum 
women (File 02-0192). According to Ms. Cindy Ward of 
DHS, such outreach services include assistance in finding 
and securing permanent housing, as well as continuing 
case management to help clients maintain housing. 
Specifically, the supplemental appropriation from April of 
2002 allocated an additional $47,000 to the Homeless 
Prenatal Program agency to provide eligible homeless 
families with rental assistance grants to help pay for 
move-in costs such as security deposits. Ms. Ward advises 
that participants receive, on average, $800 to $1,200 per 
family. The Homeless Prenatal Program selects 
participants who are "housing ready," or demonstrate an 
ability to pay rent and maintain the housing. 

$23,500, or 50 percent of the $47,000 supplemental 
appropriation, was previously placed on reserve by the 
Finance Committee pending (a) the Homeless Prenatal 
Program making a change to their security deposit policy 
to require that security deposits paid for by the Homeless 
Prenatal Program to a landlord on behalf of an eligible 
homeless family be returned to the Program by the 
landlord when the family moves out of a rented housing 
unit, and (b) the establishment by the Homeless Prenatal 
Program of a Revolving Fund consisting of the returned 
security deposit monies. According to Ms. Ward, the 
Homeless Prenatal Program has changed its security 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

6 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 



deposit policy to require that the landlords return the 
security deposits to the Homeless Prenatal Program when 
the families move out of the rented units. In the past, the 
families were allowed to keep the security deposits 
returned by the landlords when the families moved out of 
the rented units. However, although the Finance 
Committee requested this change in the security deposit 
policy and the establishment of the related Revolving 
Fund at its meeting of April 10, 2002, Ms. Ward reports 
that the Homeless Prenatal Program is still in the process 
of developing a Revolving Fund. According to Ms. Ward, 
no security deposits have been returned to the Homeless 
Prenatal Program since the Program changed its security 
deposit policy in June of 2002 because no families have 
moved out of housing since the change in policy. Ms. Ward 
reports that the DHS is unable to estimate the amount of 
the security deposit monies which would be available to 
establish a Revolving Fund. According to Ms. Ward, the 
Homeless Prenatal Program has no record of the security 
deposits returned by landlords to families in the past. 



Comments: 



1. Attachment I is a memorandum from Ms. Ward 
explaining the changes in the Homeless Prenatal 
Program's security deposit procedures. According to Ms. 
Ward, the Homeless Prenatal Program has developed a 
"Deposit Return Agreement" to be signed by a Homeless 
Prenatal Program representative and the landlord to 
ensure that the security deposit provided by the Program 
is returned to the Program. Attachment II is a copy of this 
Agreement. 



2. In Attachment I, Ms. Ward states "We do not 
anticipate a reduction in HPP's contract amount as a 
result of this policy change. HPP has always had more 
clients than they could serve within current funding 
levels. Therefore, this policy change will allow HPP to 
serve more clients with the same funds." 



Recommendation: 



Approval of the requested release of reserved funds is a 
policy matter for the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

7 



City and County of San Francisco Department of Human Services 




Trent Rhorer 
Executive Director 

Deputy Director 
Janice Anderson-Sant 
Jim Buick 
Sally Kipper 



July 15, 2002 

Anna La Forte 

Budget Analyst's Office 

San Francisco Board of Supervisors 

1390 Market Street, Suite 1025 

San Francisco, C A. 94102 

Please allow this letter to explain the policy change that has been made at the Homeless Prenatal Program. These 
changes were at the request of Supervisor Peskin, and attached to the supplemental fluids received by the HPP 
program as approved by the Finance Committee on April 10, 2002 for assisting homeless families who have found 
permanent housing but need assistance with their housing deposit. 

At the direction of the Finance Committee, $23,500 was put on reserve pending the Homeless Prenatal Program 
(HPP) making a change in their policy regarding the return of deposits. The check for security deposits has alway 
been issued to the landlord by HPP. However, families have been allowed to keep the portion of the deposit 
returned by the landlord if they moved. The Homeless Prenatal Program now requires that landlords return the 
deposit to HPP. With this policy change, returned deposits can be used again to assist another family in obtaining 
housing. HPP has developed and implemented a "Deposit Return Agreement" to be signed by an agency 
representative and the landlord, ensuring that the deposit will be returned to HPP at termination of occupancy. 
HPP has found landlords to be supportive of this policy change and fully cooperative in the process. 

We do not anticipate a reduction in HPP's contract amount as a result of this policy change. HPP has always had 
more clients than they could serve within current funding levels. Therefore, this policy change will allow HPP to 
serve more clients with the same funds. The number of additional families which can be served under this new 
policy will depend on the amount of deposits actually returned to HPP after deducting for any rent owed, damage 
or other legitimate landlord expenses. 

Please call me at 558-2847 if you have any further questions. 

Sincerely, 



Cindy Ward 

Homeless Family Programs Manager 

SFDHS 



(415)557-5000 P.O. Box 7988 San Francisco, California 9412 




HOMELESS PRENATAL PROGRAM 

995 Market St. #1010 

San Francisco, CA 94103 

(415) 546-6755 

fax: (415) 546-6778 

■wv/w. hornelessprenslal.org 



Deposit Return Agreement 

Date: 



Dear 



(Property Owner) 



We are issuing Deposit Assistance Funds in the amount of 

in behalf of [ who is a client of the Homeless 

Prenatal Program. 

Because these funds are being paid by this agency in behalf of the tenant, any of 
the legally refundable deposit, at the termination of occupancy, is to be returned 
to the Homeless Prenatal Program. 

We thank you for your cooperation in behalf of the agency and the tenant. 

Sincerely, 

Agency Representative: 



I consent to the above, 



Signature of the Landlord 



Date 



Landlord Phone # 



t •* 



002E i3ra3Sbn dH wh82 = ti 8002 st "inr 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 

Item 7 - File 01-1199 



Department: 
Item: 



Municipal Transportation Agency (MUNI) 

Resolution concurring with the Controller's certification 
that paratransit services for the Municipal 
Transportation Agency can be practically performed by a 
private contractor at a lower cost than by City and County 
employees. 



Services to be 
Performed: 



Paratransit Services 



Description: 



Charter Section 10.104 provides that the City may 
contract with private firms for services which had been 
performed by City employees if the Controller certifies, 
and the Board of Supervisors concurs, that such services 
can in fact be performed by private firms at a lower cost 
than similar work services performed by City employees. 

Paratransit Services provide door-to-door transportation 
services for persons with disabilities. This is 
accomplished through four modes of transportation, 
including taxis, ramp taxis, lift vans, and group vans, 
which cover a service area with geographic boundaries of 
the City and County of San Francisco, small portions of 
northern San Mateo County (those areas within % mile of 
Mum and Bay Area Rapid Transit (BART) routes that run 
from San Francisco to the Daly City BART station) and 
Treasure Island. Paratransit Services are intended to 
provide a service area identical to that of Muni. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

10 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 

The Controller has determined that contracting for the 
paratransit services for FY 2002-03 would result in 
estimated savings as follows: 



City-Operated Service Costs 



Salaries 
Fringe Benefits 
Capital and 

Expenses 

Total 



Operating 



Lowest 


Highest 


Salary 


Salary 


Step 


Steo 



$11,134,797 $14,581,113 

3,808,388 4,239,707 

3.901.846 3.901.846 

$18,845,031 $22,722,666 



Estimated Total Contract 
Cost 

Estimated Savings 



S18.108.565 $18.113.397 
$736,466 $4,609,269 



Comments: 



Recommendation: 



1. Paratransit Services were first certified, as required by 
Charter Section 10.104, in 1984 and have been provided 
by an outside contractor since that time. 

2. Ms. Kate Toran of Muni reports that Paratransit 
Services has been provided by Intelitran, a private 
contractor, since April of 2000. The Muni selected 
Intelitran for a five-year contract through a Request for 
Proposal (RFP) process, previously approved by the Board 
of Supervisors (File No. 00-0045). 

3. The Estimated Total Contract Cost used for the 
purpose of this analysis is the contractor's estimate of the 
costs to provide paratransit services for FY 2002-2003. 

4. The Controller's supplemental questionnaire with the 
Department's responses is attached to this report. 

Approve the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

11 



CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE: |^||^||t 
DEPARTMENT: Municipal Transportation Agency 
CONTRACT SERVICES: Paratransit 
CONTRACT PERIOD: 07/01/02-06/30/03 

(1 ) Who performed the activity/service prior to contracting out? 
The paratransit service has always been contracted out. 

(2) How many City employees were laid off as a result of contracting out? 
None. 

(3) Explain the disposition of employees if they were not laid off. 
N/A 

(4) What percentage of City employees' time is spent of services to be contracted out? 

20% of one full-time equivalent contract administrator plus 3 hours per month of a 1630 Accountant. 

(5) How long have the services been contracted out? Is this likely to be a one-time or an ongoing request for 
contracting out? 

Twenty-two years. Likely to be an on-going request for contracting out. 

(6) What was the first fiscal year for a Proposition J certification? Has it been certified for each subsequent 
year? 

FY 1933-84. Yes, it has been certified every year it has been submitted. 

(7) How will the services meet the goals of your MBE/WBE Action Plan? 
The contract had a DBE goal of 40%. 

(8) Does the proposed contractor provide health insurance for its employees? 
Yes, the contract requires health insurance for employees. 

(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same benefits 
provided to employees with domestic partners? If not, how does the proposed contractor comply with the 
Domestic Partners ordinance? 

Yes, the contractor provides benefits to employees with spouses and domestic partners. 

(10) Does the proposed contractor pay meet the provisions of the Minimum Compensation Ordinance? 
Yes, the contractor meets the provisions of the Minimum Compensation Ordinance. 



Department Representative: Annette Williams 
Telephone Number: 923-6142 



12 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 



Item 8 - File 02-1137 
Department: 

Item: 



Services to be 
Performed: 



Description: 



Public Transportation Commission (PTC) 
Municipal Railway (Muni) 

Resolution concurring with the Controller's certification 
that facility security services for the Municipal 
Transportation Agency can continue to be practically 
performed by a private contractor at lower cost than by 
City and County employees. 

Comprehensive facility security services for Municipal 
Railway operations. 

Charter Section 10.104 provides that the City may 
contract with private firms for services, if the Controller 
certifies, and the Board of Supervisors concurs, that such 
services can in fact be performed by private firms at a 
lower cost than similar work by City employees. 

Facility security services for Municipal Railway (Muni) 
operations consist of unarmed stationary and mobile 
guards at Muni facilities, armed guards attending to Muni 
employees involved in the handling of cash, tickets and 
passes, and security analysis and development of plans for 
improving physical security at Muni facilities. 

The Controller has determined that contracting for the 
facility security services for Muni for FY 2002-2003 would 
result in estimated savings as follows: 



Lowest 



Highest 



Salary Step Salary Step 



City-Operated Service Costs 
Salaries 
Fringe Benefits 
Total 



$1,226,376 
351.650 



$1,453,351 
387,330 



$1,578,026 $1,840,681 



Contractual Services Cost* (1.436.817) (1.440.308) 

Estimated Savings $141,209 $400,373 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

13 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 

* According to Mr. Joe Matranga of the Controller's Office, 
the Contractual Services Cost includes (a) the current 
contractor's cost of $1,416,420 and (b) the salary and fringe 
benefits of a 0.25 FTE 8221 Chief of Protective Services 
position for contract monitoring, at the lowest salary step of 
$20,397, and highest salary step of $23,888. The current 
contractor's cost of $1,416,420 is comprised of the cost of (a) 
$829,586.76 based on 31,001 hours @ $26.76 per hour for 
armed patrol officers, (b) $104,955.76 based on 4,732 hours 
@ $22.18 per hour for unarmed patrol officers, and (c) 
$481,877.76 based on 17,472 hours @ $27.58 per hour for 
unarmed supervisors. 

Comments: 1. According to Mr. Walter Gibbons of Muni, facility 

security services for the Muni were first certified as 
required by Charter Section 10.104 in FY 1983-84 and 
have been provided by an outside contractor since 1975. 

2. Mr. Gibbons states that the current contract for the 
Muni facility security services is with King Security 
Services. The contract with King Security Services 
expired on June 30, 2001. Mr. Gibbons states that the 
contract with King Security Services has been on a month- 
to-month basis since that time. According to Ms. 
Marybeth Long of Muni Purchasing Division, Muni 
conducted a competitive bidding process for Muni facility 
security services in May of 2001. King Security Services 
submitted the lowest bid which was accepted by Muni. 
According to Ms. Long, Muni plans to enter into a contract 
with King Security Services to provide security services 
upon approval of this resolution. The anticipated contract 
period for the new Muni Facility Security Services with 
King Security Services is approximately August 1, 2002 
through June 30, 2005. The contract could be renewed for 
up to two years after the expiration of the original contract 
period, by mutual agreement between Muni and King 
Security Services, according to Ms. Long. 

3. The estimated Contractual Services Cost used for the 
purpose of this analysis is the Controller's estimate of the 
cost to provide facility security services for FY 2002-2003. 

4. The Controller's supplemental questionnaire, with the 
department's responses, is attached to this report. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

14 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 

Recommendation: Approve the proposed resolution. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

15 



SefK B>: BOARD OF SUPERVISORS; 415 554 7714; Jul-lb-o«d <;:4UKM; 

CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 



Attachment 



DEPARTMENT: _Public Transp ort ation (MUNI) 

CONTRACT SERVICES: Comprehensive Facility Security Services 

CONTRACT PERIOD: JuW 1. 2002 thru June 30, 2003 : 

(1) Who performed the activity/service prior to contracting out? 

King Security Services Inc. 

(2) How many City employees were laid off as a result of contracting out? 

None 

(3) Explain the disposition of employees if they were not laid off. 

N/A 
(•I) What percentage of City employees' time is spent of services to be contracted out? 

Appro3iroately 20% of Class 8221 position to monitor contract (.25 FTE) 

(5) How long have the services been contracted out? Is this likely to be a one-time or aii ongoing 
request for contracting out? 

Since 1975; Likely to be on-going. 

(6) What was the first fiscal year for a Proposition J certification? Has it been certified for each 
subsequent year? 

1383-84 FiscAl Year. Yes. 

(7) How will the services meet the goals of your MBEAVBE Action Plan? 

They will comply with requirements of FTADBE Program. 

(8) Does the proposed contract require that die contractor provide health insurance for its employees? 

Yes. Yes. 

(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same 
benefits provided to employees with domestic partners? If not, how does the proposed contractor 
comply with the Domestic Partners ordinance? 

Contractor on HRC approved list for equal benefits requirements. 

(10) Docs the contractor Pay meet the provisions of the Minimum Compensation Ordinance 

Ye; 



Deportment .-vcprcsentauv! 



Walter Gibbon; 




Telephone Numoar (4151 55-1-715 



16 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 

Item 9 -File 02-1188 



Department: 
Item: 



Services to be 
Performed: 



Description: 



Airport Commission 

Resolution approving the Controller's certification that 
shuttle bus services at San Francisco International 
Airport for (a) the San Francisco International Airport's 
Long-Term Parking lot, (b) the employee garage, and (c) 
surface Lot DD can continue to be practically performed 
by a private contractor at a lower cost than if such work 
were performed by City and County employees. 



Shuttle Bus Services at San Francisco International 
Airport (SFO). 

Charter Section 10.104 provides that the City may 
contract with private firms for services which can be 
performed by City employees if the Controller certifies, 
and the Board of Supervisors concurs, that such services 
can in fact be performed by private firms at a lower cost 
than similar work services performed by City employees. 

The Controller has determined that contracting for the 
Airport shuttle bus services for FY 2002-2003 would 
result in estimated savings as follows: 



City-Operated Service Costs 

Salaries 
Fringe Benefits 
Total 

Estimated Total Contract 
Cost 

Estimated Savings 



Lowest 

Salary 

Step 


Highest 

Salary 

Step 


$2,790,966 

786.784 

$3,577,750 


$3,810,293 

918,636 

$4,728,929 


3,445.279 


3,446.988 


$132,471 


$1,281,941 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 

Comments: 1. Shuttle bus services consist of providing free ground 

transportation to airline passengers between the 
terminals and long-term parking lot (Lot D), and to 
Airline and Airport employees between the terminals and 
the Airport's employee parking garage and employee 
parking lot (Lot DD). 

2. Shuttle bus services for San Francisco International 
Airport were first certified as required by Charter Section 
10.104 in FY 1974-75 and have been contracted out 
continuously since then. 

3. According to Mr. Daniel Pino of the Airport, the 
Airport awarded a ten-year contract for the operation of 
shuttle bus services to SFO Shuttle Bus Company, 
effective January 1, 1998. The proposed resolution would 
retroactively approve the Controller's certification for the 
fifth full fiscal year of the ten-year contract, from July 1, 
2002 through June 30, 2003. 

4. The Contractual Service Cost used for the purpose of 
this analysis is based on the SFO Shuttle Bus Company's 
proposed contract for FY 2002-2003 to provide the shuttle 
bus service at the Airport, according to Mr. Pino. 

5. The Contractual Services Cost of $3,446,988 for FY 
2002-2003 is $850,620 or 19.8 percent less than the FY 
2001-2002 cost of $4,297,608. Attachment I to this memo 
is a memorandum from Ms. Alice Sgourakis of the Airport 
explaining the reasons for the decrease in the contractual 
services costs. 

6. The Controller's supplemental questionnaire with the 
Department's response is Attachment II to this report. 



Recommendation: Approve the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

13 



Memo to Finance Committee 

July 24, 2002 Finance Committee Meeting 




cc: Supervisor Peskin 
Supervisor Daly 
President Ammiano 
Clerk of the Board 
Controller 
Ben Rosenfield 
Ted Lakey 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

19 



c3 - d 



■Li 



8SS S TcS 0S9 

Attachment I 



6£:TT C002-8T-XII 



SFO 



San Francisco International Airport 



July 18, 2002 

Mr. Matthew Stokes 
Budget Analyst Office 
1390 Market Street, Suite 1025 
San Francisco, CA 94102 

SUBJECT: SFO Shuttle Bus Contract Fiscal Year 2002/2003 

Dear Mr. Stokes: 



P.O Reix S007 

San Franrivii, CA 'J4UU 

Tpl hSUflJI ,'>OO0 

rjxhW.BJi r.oo; 

www lly.tn.cnm 



commisiiON 
mr »n0 countt 

OF UN FMNUSCO 
WILLIE L. IKCWN Jk. 



'HHUCN1 



UKKt KA2I0U 



MICN*(l S 570UNSH1T 



LINO* 5. crunch 



SFO Shuttle Bus Company Inc. is the current contract operator of the 
Airport's 24-hour long-term parking and employee shuttle services per 
Resolution #96-0130 approved by the Airport Commission May 21 , 1996. 
The shuttle serves Airport employees who park in Employee Garage DD and 
air passengers who park in Long-Term Parking Lot D. The shuttle service 
provides a key transportation connection to the Airport terminals and major 
employment sites along McDonnell Road. 

As a result of the revaluation of all Airport's contract budgets in part as a 
result of recent national events, the Airport's Budget & Finance division 
requested that we reevaluate service hours to accommodate a streamlined 
budget amount for Fiscal Year 2002/2003. In cooperation with Airport's 
Aviation Management and Business & Finance, Landside Operations was 
able to develop a budget based on a reduction in average daily service hours 
from 284 hours to an average of 217 daily service hours for Fiscal Year 
2002-2003. The reduction of service hours (not drivers) will have little effect 
on service provided to long-term passengers and employees as most of the 
reduction was accomplished during non-peak service hours. Passenger 
service along McDonnell Road will also benefit by the opening of AirTrain 



,0MNL.M«iiriN service this year. 

Ainrom vift:Ton 



Staff is confident that we will be able to operate shuttle service with the 
current budget without negatively affecting passengers on the long-term and 
employee bus routes. 

If you have any further questions, please contact Daniel Pino at 
(650)821-6514. 

Sincerely, 

Alice Sgourakfe/ 

Ground Transportation Manager 

Landside Operations 



20 



Attachment II 



CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 

Department: Airport Commission 

Contract Services: Airport Shuttle Bus Services 

Contract Period: July 1, 2002 to June 30, 2003 

1 . Who performed the activity/service prior to contracting out? 

With construction of the Remote Public Parking Facility in 1975, shuttle -bus service was 
initiated by contract. Prior to 1975, the area was utilized as a small lot for SFIA employee 
parking. An employee van service was provided by Airport Parking Management (APM). 

2. How many City employees were laid off as a result of contracting out? 
None (See #1) 

3 . Explain the disposition of employees if they were not laid off? 
N/A (See #1) " 

4. What percentage of City employees' time is spent on services to be contracted out? 
N/A (see #1) 

5. How long have the services been contracted out? Is this likely to be a one-time or an 
ongoing request for contracting out? 

Since 1975. The current contract commenced on January 1, 1998 for a 10-year period with 
up to five additional one -year options. 

6. What was the first fiscal year for a Proposition J certification: Has it been certified for each 
subsequent year? 

1974-1975. Yes, it has been certified each year since. 

7. How will the services meet the goals of your MBE/WBE Action Plan? 

Although this contract was not awarded to a MBE/WBE firm in 1996, it must adhere to the 
City's non-discrirnination ordinance contained in Chapters 12B & 12C of the City's 
Administrative Code. The Contractor continues to utilize minority and woman owned 
suppliers (i.e., tire manufacturer and car cleaners). 

8. Does the proposed contract require that the contractor provide health insurance for its 
employees? Even if not required, are health benefits provided? 

The contract does not require health insurance. However, the contractor provides health 
insurance for its employees per a labor agreement. 

9. Does the proposed contractor provide benefits to employees with spouses? If so, are the 
same benefits provided to employees with domestic partners? If not, how does the 
proposed contractor comply with the Domestic Partners ordinance? 

The contractor provides benefits to spouses and domestic partners. 



Department Representative: ^>f-^A^c^—>^\ i^- : ^~-^% <t\. 




D/dcerlBriscoe, Deputy .AiiporrTJ^ecto/- Operations 
Telephone Number: (650) 821-5010 



DPino/WPDOC/02013A9.DP2 



21 




[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 



CITY AND COUNTY \j M&lm U& OF SAN FRANCISCO 

§z/o± 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



July 18, 2002 

TO: Finance Committee DOCUMENTS DEPT. 

FROM: /Budget Analyst jyi 2 9 ?002 

SUBJECT: July 22, 2002 Special Finance Committee Meeting SAN FRANCISCO 

* PUBLIC LIBRARY 

Item 1 - File 02-0910 

Note: This item was continued by the Finance Committee at its meeting of July 17, 
2002. This item was amended by the Finance Committee at its meeting of 
July 10, 2002 and was continued. The proposed amendment would make 
issuance of the bonds, subject to the requirement that Chapter 37 of the 
Administrative Code be amended to provide that landlords may passthrough 
to residential tenants 50% of the water bill costs attributable to water rate 
increases resulting from issuance of the Bonds, where a unit is in compliance 
with any applicable laws requiring water conservation devices, tenants may 
file hardship applications with the Rent Board for relief of all or part of the 
cost passthrough and their affected landlords may utilize any available 
Public Utilities Commission low-income rate discount program or similar 
program for water bill reduction based on the tenants' hardship status. 

Further, at the request of the Committee, Ms. Martel will respond directly to 
the Committee pertaining to specific capital improvement project questions 
raised at the Committee's meeting of July 17, 2002. 

Department: Public Utilities Commission (PUC) 

Mayor's Office of Public Finance 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



Item: 



Amount: 



Resolution calling and providing for a special election to 
be held in the City and County of San Francisco for the 
purpose of submitting to the qualified voters of said City 
and County on November 5, 2002 a proposition for the 
issuance of revenue bonds and/or other forms of revenue 
financing by the Public Utilities Commission in a 
principal amount not to exceed $1,628,000,000 to finance 
the acquisition and construction of improvements to the 
City's water system and for the possible imposition of a 
surcharge on retail water customers; and consolidating 
said special election with the General Municipal Election 
to be held on November 5, 2002; finding the proposed 
project is in conformity with the priority of Planning Code 
Section 101.1(b) and the City's General Plan. 

The maximum principal amount is not to exceed $1,628 
billion. 



Source of Funds: 



Revenue bonds and/or other forms of revenue financing. 
Other forms of revenue financing include notes, 
debentures, commercial paper, variable rate demand 
notes and bonds, auction rate securities, lease revenue 
bonds, installment sale agreements, and other forms of 
similar financial products which may be created from 
time to time. 1 



Description: 



The PUC has identified water system ($3,628 billion) and 
clean water system ($996 million) capital improvement 
costs totaling $4,624 billion, comprising: 



1 According to Ms. Karol Ostberg of the PUC, the PUC will manage its debt portfolio to achieve an 
overall objective of minimizing costs and maintaining flexibility to respond to changing market 
conditions and a dynamic capital improvement program. The bulk of the debt is anticipated to be 
long-term fixed-rate revenue bonds which have the advantage of known financing costs over the 
useful life of the asset being financed. The PUC also anticipates using certain types of variable rate 
debt to take advantage of lower average interest rates. Use of such instruments would be 
particularly advantageous during construction of capital projects, by lowering the cost of capitalized 
interest. In addition, certain types of variable rate debt may be issued to permanently fund project 
costs. The added benefit of overall lower interest rates associated with variable rates is somewhat 
offset by the interest rate volatility associated with variable rate debt, so such debt would not exceed 
25 percent of the entire bond issuance, according to Ms. Ostberg. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

2 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



• $2,913 billion for regional water system 
improvements 2 . Regional customers would pay 
approximately 69 percent of the cost (approximately $2 
billion) and San Francisco ratepayers would pay 
approximately 31 percent of the cost (approximately 
$913 million). 

• $715 million for local water system projects within San 
Francisco 3 . This would be entirely funded by San 
Francisco ratepayers. 

• $996 million for Clean Water capital improvement 
projects within San Francisco 4 . This would be entirely 
funded by San Francisco ratepayers. As explained in 
Comment No. 15 below, separate bond issues would be 
required for these projects which are currently 
estimated to total $996 million. 

The $3,628 billion water system capital improvement 
program is intended to replace or repair aging water 
system facilities since many of the system's components 
are at the end of their useful life, address seismic 
concerns (particularly the lack of back-up facilities), 
accommodate future increases in the demand for water, 
and meet future regulatory requirements for the quality 
of drinking water. If this requested revenue bond 
authorization is approved by the voters in the November 
of 2002 election, the 13 year capital improvement 
program would start in 2003 and construction would be 
scheduled for completion by 2016. The PUC would review 
and update the plan annually during this 13 year 
program. 

The water system capital improvement program consists 
of the 77 projects hsted in Attachment V, provided by the 
PUC. These 77 projects comprise: 



2 Under the Amendment of the Whole, the regional water system comprises facilities for the storage, 
treatment, and transmission of water operated and maintained by the City in the Tuolumne, 
Stanislaus, San Joaquin, Alameda, Santa Clara, and San Mateo Counties, plus three reservoirs in 
San Francisco itself. The regional water system provides water to the City and the PUC's 29 
wholesale customers, who disperse the water to 1.6 million clients in Alameda, San Mateo, and 
Santa Clara Counties. 

3 The local water system delivers water from the regional water system throughout the City and 
stores a portion of it locally in City reservoirs. 

4 The clean water system collects, treats, and disposes City sewage and storm water. The City also 
contracts with public sector agencies in San Mateo County to provide wastewater services. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

3 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



(a) 37 regional water system capital improvement 
projects, including three reservoirs within City 
boundaries which are considered to be regional 
assets. These 37 projects would cost a total of $2,913 
billion of which regional customers would pay 
approximately $2 billion (approximately 69 percent) 
and San Francisco ratepayers would pay 
approximately $913 million (approximately 31 
percent), as itemized in Attachment V. This split in 
financing responsibility is discussed in Comment No. 
6. 

(b) 40 local water system capital improvement projects 
at a cost to San Francisco ratepayers of $715 million. 

The total cost to San Francisco ratepayers of these 77 
projects is $1,628 billion. The proposed revenue bonds in 
the amount of $1,628 billion would fund: 

• $937 million for the actual project construction costs 
(approximately 57.6 percent of the total $1,628 billion 
cost). 

• $210 million in escalation costs assuming 3 percent 
annual inflation during the 13 year construction 
period (approximately 12.9 percent of the total $1,628 
billion cost). 

• $185 million in program contingency costs and 
management reserves (approximately 11.4 percent of 
the total $1,628 billion cost). According to Ms. Karol 
Ostberg of the PUC, this amount includes a 10 
percent margin for program contingencies for the 
purpose of completing the program on budget and on 
schedule (10 percent of total construction and 
escalation costs is $115 million). The contingency will 
only be available for changes in scope and design that 
cannot be foreseen at the capital improvement 
program's outset. In addition, there is a 6 percent 
management reserve (6 percent of total construction 
and escalation costs is $69 million). Management 
reserves are required by large capital improvement 
programs in order to manage externally imposed 
conditions, critical emergencies, and other conditions 
that cannot be predicted in advance. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

4 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



$296 million for financing costs (approximately 18.2 
percent of the total $1,628 billion cost). This amount 

comprises: 



Financing Costs 


Cost 


Costs of issuance 5 
Reserve fund deposit 6 
Bond insurance premium 7 
Capitalized interest fund 8 

Total: 


$16,280,000 

115,292,000 

8,140,000 

156.288.000 

$296,000,000 



The breakdown of this $1,628 billion in costs between 
regional water projects and local water projects is shown 
in the following table: 





Construction 


Construction 
Inflation 


Contingency & 

Management 

Reserve 


Financing 
Costs 


Totals 


Regional Water 
Local Water 

TOTAL: 


$519,437,000 
417.854.000 

$937,291,000 


$123,899,000 
85.814,000 

$209,713,000 


$103,792,000 
81.296.000 

$185,088,000 


$166,026,000 
129.974.000 

$296,000,000 


$913,154,000 
714.938.000 

$1,628,092,000* 



* Note: Rounds to $1,628 billion. 

All expenditures of bond proceeds for capital improvement 
program purposes, and all capital budgets, are subject to 
appropriation approval by the Mayor and the Board of 
Supervisors. 



5 Costs of issuance include (a) rating agency fees (an estimated $6,512,000 or approximately 40 
percent of the total costs of issuance), (b) bond counsel fees (an estimated $5,698,000 or 
approximately 35 percent of the total costs of issuance), (c) financial advisory fees (an estimated 
$2,442,000 or approximately 15 percent of the total costs of issuance), and (d) printing and 
distribution of official statements, and other related fees (an estimated $1,628,000 or approximately 
10 percent of the total costs of issuance). 

6 The debt service reserve fund is equal to maximum annual debt sendee. 

7 A bond insurance policy makes scheduled debt service payments if the issuer fails to do so. Bond 
insurance provides an issue an AAA rating and the resulting lower interest rates save more than the 
cost of the bond insurance premium, according to Ms. Ostberg. 

5 The capitalized interest fund is for bond proceeds which are reserved to pay interest on an issue for 
a period of time early in the term of the issue when capital improvement project construction is 
commencing. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

5 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 

The proposed resolution to authorize a $1,628 billion 
revenue bond issue, although considerably smaller than 
the original $3,628 billion proposal, would remain the 
largest single voter authorization ever put before San 
Francisco voters. As noted above, the $1,628 billion in 
revenue bonds would finance the 77 water system capital 
improvement projects listed in Attachment V. 

Comments: Capital Improvement Program Planning 

1. In February of 1998, the PUC published a draft long- 
term Water Enterprise capital improvement plan which 
identified projects cumulatively costing an estimated $3.5 
billion and initiated development of a Program 
Management Consultant contract to assist with delivering 
such a large capital improvement program. In January of 
2000, two long-range financial reports by Bartle Wells 
Associates recommended that the PUC develop and adopt 
an integrated capital improvement program and long- 
range financial plan. In February of 2000, the State 
Auditor General recommended the completion of a long- 
range capital improvement program financial plan. In 
April of 2000, the PUC published a Water Supply Master 
Plan and a Facilities Reliability Plan which identified 
critical water system capital improvement projects, most 
of which were included in prior reports, but which failed 
to develop financing plans. On August 28, 2000, the 
Board of Supervisors authorized the first year of a four- 
year Program Management Consultant contract between 
the PUC and the San Francisco Water Alliance 9 , now 
renamed the Water Infrastructure Partners (see 
Comment No. 17). Since then, the PUC and the Program 
Management Consultant have worked to develop plans 
which (a) prioritized capital improvement projects in 
terms of their ability to improve reliability and reduce 
exposure to risk, (b) accurately estimated individual 
capital improvement projects' costs, (c) specified the 
project activities and staffing required to complete 
individual capital improvement projects, and (d) included 
financing plans. 



The San Francisco Water Alliance was a joint venture of Bechtel Infrastructure Corporation, The 
Jefferson Company, and Sverdrup Civil, Inc. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

6 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



2. The PUC hired a permanent General Manager in 
September of 2001 who focused on further development of 
the capital improvement program. In January of 2002, 
the General Manager presented the PUC with revised 
draft capital improvement plan documents. In response, 
the PUC requested public hearings to solicit feedback 
from local ratepayers and regional customers. Further 
revisions to the draft capital improvement program 
documents were made based on the input received at the 
public hearings, and on May 28, 2002, the PUC approved 
three key documents: 

• A Long-Term Strategic Plan for Capital Improvements 
which identifies strategic objectives and performance 
measurements to guide the capital improvement 
program. 

• A ten-year capital improvement program showing 
capital improvement program costs and schedules. 
Ms. Ostberg advises that all projects will begin 
construction within ten years, but that some may take 
up to an additional three years to close-out or 
complete, for a total of 13 years. 

• A Long-Range Financial Plan which recommends an 
optimal strategy for financing the capital improvement 
program. 

Evaluations of the Capital Improvement Program 

3. Following a recommendation from the Mayor's Public 
Utilities Infrastructure Task Force, the PUC's General 
Manager hired R.W. Beck, an independent engineering 
firm, to review the development and validity of the entire 
capital improvement program, the PUC's ability to 
successfully implement a capital improvement program of 
that size, and the long-range financial plan. Ms. Ostberg 
states that R.W. Beck was selected by the PUC General 
Manager on the basis of that firm's reputation, experience 
with similar projects, independence from the PUC (it has 
no other business with the PUC), and availability. 
Appendix 1 to this report presents a digest of R.W. Beck's 
conclusions and recommendations. 

4. In April and May of 2002, the R.W. Beck evaluation 
was reviewed by a Blue Ribbon Panel of professionals 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

7 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



selected by the PUC's General Manager in consultation 
with the San Francisco Planning and Urban Research 
Association (SPUR) who had expertise in water delivery, 
infrastructure, planning, finance, and other disciplines. 
This panel made a number of recommendations which are 
also summarized in Appendix 1 to this report. 

5. Attachment I, provided by the PUC, states that the 
PUC agrees with all of the recommendations made by 
both R.W. Beck and the Blue Ribbon Panel, and states 
that it plans to implement those recommendations over 
the next two to three years. 

Concurrent Legislative Developments 

6. As outlined in Attachment I, provided by the PUC, the 
State Legislature is currently considering three bills 
which would impact the PUC's proposed capital 
improvement program. Of these three bills, SB1870 is 
supported by the PUC. SB 1870 was originally proposed 
by the Bay Area Water Users Association to give 
wholesale customers more opportunity to be involved in 
financing regional water system capital improvement 
projects. SB1870 proposes to establish an independent 
entity, the San Francisco Bay Area Regional Water 
System Financing Authority, for the financing of regional 
water system projects. If enacted, the San Francisco Bay 
Area Regional Water System Financing Authority would 
assume responsibility for issuing revenue bonds in the 
amount of approximately $2 billion, or approximately 69 
percent of the $2,913 billion regional water system capital 
improvement program costs for which wholesale 
customers are responsible. This would leave the City 
responsible for issuing revenue bonds for the remaining 
approximately 31 percent, or approximately $913 million, 
of the regional water system capital improvement 
program for which the City is responsible. The amount of 
$913 million for the City's share of the regional water 
system capital improvement program plus $715 million 
for the local water system capital improvement program 
totals the $1,628 billion revenue bond issue and/or other 
forms of revenue financing which are now being proposed 
under this legislation. Attachment I, provided by the 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



PUC, outlines the three State bills and their potential 
impacts on the PUC's capital improvement program. 

Capital Improvement Program Funding 

7. According to Ms. Ostberg, the general provisions of the 
sale of the Water Revenue Bonds would be as follows: 

• The timing of the issuance of the water revenue bonds 
each year would be determined by market conditions 
and capital improvement project spending rates. 
While the table below aligns projected bond issuance 
dates with projected capital improvement project 
expenditures, funding in certain years could initially 
take the form of commercial paper or other variable 
rate interest debt to be refunded by later bond issues, 
if financially advantageous to the City. 

• At any given time, the PUC might have financing in 
place such as commercial paper to serve as interim 
financing during the capital improvement project 
construction phases, as well as 30 year term fixed or 
variable rate bonds to provide permanent financing 
once construction is completed. 

• The PUC expects to actively seek and take advantage 
of other financing sources as they become available, 
including State or Federal grants, extraordinary 
revenues (for example, one-time revenues from surplus 
land sales), and State revolving funds. Such 
alternative sources, if available, would reduce the 
amount of bonds which would need to be issued and 
would lower the overall capital improvement program 
costs. 

• Each type of financing would require the prior 
approval of the Mayor and the Board of Supervisors. 

• The water revenue bonds would be issued at an 
interest rate not to exceed 12 percent, or whatever 
future cap (if any) is set by State law. 

8. Attachment II, provided by the PUC, shows the 
projected debt service schedule for proposed revenue 
bonds in the amount of SI. 628 billion to be issued during 
the period of FY 2003-2004 through FY 2031-2032. Ms. 
Ostberg states that the average annual debt service 
payment will be $85 million for each of the 30 years from 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

9 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



FY 2003-2004, and the total debt service payment over 30 
years will be $2,551 billion. 

9. Attachment III, provided by the PUC, shows that San 
Francisco ratepayers currently pay the second lowest 
average water rates in the Bay Area. In FY 2002-2003, 
San Francisco ratepayers pay an average monthly water 
bill of $14.43, compared to an average monthly water bill 
of $17.51 across the 12 Bay Area jurisdictions. However, 
as shown in the table below, San Francisco ratepayers' 
share of water system projects would be paid for by 
projected gradual increases in water rates from an 
average monthly bill of $17.16 in FY 2003-2004 to an 
average monthly bill of $47.07 in FY 2015-2016, a $29.91 
per month or approximately a 174.3 percent increase 
using 2003 dollars. Ms. Ostberg advises that the water 
rates of other utilities will also increase during this period 
as a result of their own capital improvement programs or 
because they are wholesale customers of the PUC. 

Even though the proposed resolution reduces the revenue 
bond amount by $2 billion, from $3,628 billion to $1,628 
billion, the water service rate increase for San Francisco 
ratepayers would remain 174.3 percent. This is because 
San Francisco ratepayers' share of the water system 
capital improvement program remains $1,628 billion 
under either proposal, comprising $913 million for the 
City's share of regional water system capital improvement 
projects and $715 million for local water system capital 
improvement projects. The remaining $2 billion of 
regional water system projects would be funded by 
regional water customers. 

According to Mr. Bill Berry of the PUC, concerns have 
been expressed by representatives of residential landlords 
and tenants over whether or not the proposed resolution 
should permit residential landlords to recover water rate 
increases from tenants in units covered by the provisions 
of Chapter 37 of the San Francisco Administrative Code 
(the Residential Rent Stabilization and Arbitration 
Ordinance). As of the writing of this report, no decision 
has been made whether or not to include a pass-through 
provision in the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

10 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



10. The following tables present (a) the PUC's projected 
sale of revenue bonds or other instruments in the amount 
of $1,628 billion, and (b) the impacts on residential rates 
for San Francisco households during the period of FY 
2003-2004 through FY 2015-2016. 



Proiected Bond Issuance Schedule 



Fiscal Year 


2003-04 


2004-05 


2005-06 


2006-07 


2007-08 


2008-09 


2009-10 


Amount of 
Financing Issued 

Regional Water 
Local Water 
Annual Total 


(S million) 

$7 

10 

$17 


($ million) 

$17 
20 

$37 


(S million) 

$24 

53 

$77 


($ million) 

$67 

67 

$134 


($ million) 

$105 

77 
$182 


($ million) 

$132 
154 

• $286 


($ million) 

$130 
133 

$263 


Fiscal Year 


2010-11 


2011-12 


2012-13 


2013-14 


2014-15 


2015-16 


Totals 


Amount of 
Financing Issued 

Regional Water 
Local Water 
Annual Total 


($ million) 

$165 

77 

$242 


($ million) 

$79 

31 

$110 


(S million) 

$66 

56 

$122 


(S million) 

$56 

37 

$93 


($ million) 

$44 



$44 


($ million) 

$21 



$21 


($ million) 

$913 
715 

$1,628 



Anticipated Impact on Residential Customers 



Fiscal Year 


2003-04 


2004-05 


2005-06 


2006-07 


2007-08 


2008-09 


2009-10 


Average monthly 
cost to SF 
households 


$17.16 


$20.42 


$22.46 


$24.71 


$26.93 


$29.35 


$32.00 


Fiscal Year 


2010-11 


2011-12 


2012-13 


2013-14 


2014-15 


2015-16 




Average monthly 
cost to SF 
households 


$34.88 


$38.01 


$41.06 


$43.11 


$45.26 


$47.07 





BOARD OF SUPERVISORS 
BUDGET ANALYST 

11 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



11. The water rates for San Francisco businesses 
between Fiscal Year 2003-2004 and 2015-2006 would 
increase by an estimated 174.3 percent using 2003 
dollars, the same increase projected for residential users. 

12. The Amendment of the Whole proposes that the 
maximum principal amount of $1,628 billion could be 
reduced if the Board of Supervisors determines that San 
Francisco ratepayers would benefit from having the 
proposed San Francisco Bay Area Regional Water System 
Financing Authority finance, in whole or in part, the 
City's portion of the regional water capital improvement 
program. According to Ms. Theresa Alvarez of the City 
Attorney's Office, if the San Francisco Bay Area Regional 
Water System Financing Authority finances such projects, 
the City would need to take one of two actions in order to 
be a voting member of the San Francisco Bay Area 
Regional Water System Financing Authority, as required 
by SB1870. The City would either have to seek voter 
approval to (a) repeal Proposition H, or (b) impose a 
surcharge on retail water rates so that San Francisco 
ratepayers pay their share of the debt service on the 
bonds issued by the San Francisco Bay Area Regional 
Water System Financing Authority, and its operating 
expenses, given Proposition H constraints on water 
service rate increases. Ms. Alvarez states that if the 
proposed resolution is not approved by the voters, then 
the same powers could be obtained through the proposed 
Charter Amendment described in Comment No. 22 below. 
The size of the surcharge would be dependent upon the 
amount of debt incurred by the San Francisco Bay Area 
Regional Water System Financing Authority and the 
interest rates applying at the time the debt is incurred. 

13. Ms. Ostberg states that during the public hearings 
on the PUC's proposed capital improvement program, the 
PUC received considerable public comment from all 
customer classes on the impact of the proposed bond 
measure on those least able to pay higher rates. 
Therefore, the PUC intends to initiate a rate study to (a) 
review the PUC's rate structure, (b) ensure that rates are 
fairly distributed among customer classes, and (c) 
incorporate a means to support conservation and recycling 
initiatives. The rate study results are expected in early 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

12 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



2003, after the November of 2002 election but prior to the 
first issuance of the proposed bonds and the resulting rate 
increase. Ms. Ostberg advises that this rate study cannot 
be completed earlier because its largest component, a 
demand study, requires examination of the peak demand 
period of September through October of 2002. Ms. 
Ostberg advises that a rate study has not already been 
completed because (a) the PUC lacked a permanent 
General Manager, and (b) one of the key lessons learned 
from the public hearings was the public's desire to better 
understand the PUC rates structure. 

14. Appendix 2 to this report provides additional 
information on the PUC's Water Enterprise credit ratings, 
other financing options if voters do not approve the 
proposed revenue bonds, and Charter Section 9.107 
exceptions. 

15. As noted above, the proposed resolution does not 
cover the current estimate of $996 million needed to fund 
the ten projects designed to replace or repair aging clean 
water facilities. According to Ms. Ostberg, the public 
outreach hearings on the capital improvement plan held 
by the PUC in the Spring of 2002 identified a lack of 
community support for the Clean Water capital 
improvement projects selected by the PUC and raised a 
number of environmental issues. Therefore, the PUC 
General Manager is recommending that the PUC prepare 
a separate, comprehensive sewer service master plan over 
the next 18 to 24 months. Ms. Ostberg states that the 
PUC anticipates bringing a Clean Water Revenue Bond 
proposal to the Board of Supervisors during calendar year 
2004. 

Program Management Consultant 

16. On August 28, 2000, the Board of Supervisors 
approved a four-year contract between the PUC and the 
San Francisco Water Alliance 10 for program management 
services related to the capital improvement program 



10 The San Francisco Water Alliance consisted of Bechtel Infrastructure Corporation, Sverdrup 
Civil, Inc., and The Jefferson Company. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

13 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



(Board Resolution 754-00), subject to annual Board of 
Supervisors approval to renew the contract. 

17. On March 28, 2002, Bechtel Infrastructure 
Corporation withdrew from Contract Year 2 of the 
Program Management Consultant contract, thus 
terminating its contractual relationship with the City. 
The remaining joint venture partners, now consisting of 
Primus Industries, Inc. 11 and Jacobs Civil, Inc. 12 and 
renamed the Water Infrastructure Partners, requested 
that the PUC reassign the program management services 
contract to their reconstituted joint venture, with Jacobs 
Civil, Inc. as the lead partner responsible for meeting the 
contract requirements, the role formerly performed by 
Bechtel Infrastructure Corporation 13 . PUC staff 

determined that the reconstituted joint venture met or 
exceeded each of the original Request for Proposals' 
requirements and was therefore qualified and competent 
to assume responsibility for completing the contract term. 
The PUC accepted the proposed reassignment of the 
contract to the reconstituted joint venture, subject to 
Board of Supervisors approval to (a) reassign the contract, 
(b) waive the competitive procurement requirements of 
Administrative Code Sections 6.40 et seq., and (c) release 
the remaining contract funds for Contract Year 2 which 
expires on September 21, 2002. Board of Supervisors 
approval was granted on June 17, 2002 (File 02-0905). 
According to Mr. Jeet Bajwa of the PUC, it is the PUC's 
intention to request that the Board of Supervisors 



11 On October 1, 2000, The Jefferson Company changed its name to Primus Industries, Inc. Mr. 
Jefferson states that he is the sole owner of Primus Industries, Inc. According to Ms. Lillie Sunday 
of Primus Industries, Inc., on October 1, 2000 The Jefferson Company changed its name to Primus 
Industries, Inc. "to provide the necessary infrastructure required to support our rapid growth in size, 
services, and capabilities. We operate as Primus Industries, Inc. with two subsidiary companies: 
Primus Transportation Company, and Primus Infrastructure Company." Mr. Jeet Bajwa of the PUC 
states that when The Jefferson Company's name change to Primus Industries, Inc. took place on 
October 1, 2000, the Human Rights Commission was advised immediately and Human Rights 
Commission certification was issued on March 12, 2001. However, for the purposes of the former 
San Francisco Water Alliance contract, The Jefferson Company name was left unchanged. 

12 On March 1, 2002, Sverdrup Civil, Inc. was purchased by Jacobs Civil, Inc. and ceased to exist as 
a separate entity. 

13 In a March 28, 2002 letter to the PUC's General Manager, Mr. James Jefferson, President and 
CEO of Primus Industries, Inc. and Ms. Darlene Gee, Vice-President of Jacobs Civil, Inc. state: "We 
propose to rename our joint venture, if desirable, to allow a clean break from the association with 
past perceptions. We would restructure the joint venture and designate Jacobs Engineering as the 
lead. Everything else would remain unchanged." 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

14 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



approve Contract Year 3 continuation of the contract with 
the renamed Water Infrastructure Partners (September 
22, 2002 through September 21, 2003). 

18. The Controller has performed three audits of the 
Program Management Consultant's performance against 
its task orders, short-term performance measures, and 
long-term performance measures (July 20, 2001, October 
2, 2001, and April 8, 2002). In August and September of 
2001, an independent Peer Review Panel reviewed the 
work of the Program Management Consultant 14 . In May 
of 2002, the PUC completed a new performance 
evaluation of the Program Management Consultant which 
concluded that during the first half of Contract Year 2 the 
Program Management Consultant performed as follows. 
On a scale of 1 (did not deliver as agreed), 2 (partial 
fulfillment), and 3 (delivered as agreed), the Program 
Management Consultant scored 3 for "adherence to 
project schedule" and "task management", 2.61 for 
"adherence to project schedule," and 2.58 for "quality of 
work" in relation to 12 tasks. Therefore, the PUC 
evaluated the Program Management Consultant as fully 
meeting half of its key performance measures. 

19. The Budget Analyst notes that while the PUC 
intended to fully integrate PUC and Program 
Management Consultant staff during the first two 
contract years, such integration has not taken place. The 
Budget Analyst also notes that the ability of the Program 
Management Consultant to achieve significant, 
documented, and verifiable capital improvement program 
management savings remains unproven. 



14 The independent Peer Review Panel, convened to meet the Board of Supervisors requirement for 
an independent peer review of Contract Year 1 of the San Francisco Water Alliance contract, 
comprised Mr. Paul Findley and Mr. Peter Talbot of Malcolm Pirnie, Inc. (a private company of 
environmental engineers, scientists, and planners) and Dr. Douglas Selby, Deputy City Manager of 
ihe City of Las Vegas. A key recommendation of that peer review was that performance measures 
should be established within each task order issued to the Program Management Consultant by the 
PUC. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

15 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 

Workforce Issues 



20. Since the Budget Analyst's first report on the 
Program Management Consultant contract issued in 
August of 2000, the Budget Analyst has noted the PUC's 
historic inability to fill vacant engineering positions in the 
PUC's Utilities Engineering Bureau. According to Ms. 
Therese Madden of the PUC, as of July 3, 2002 the 
Utilities Engineering Bureau has 60 vacancies out of 197 
positions in total (approximately 30.5 percent). Of these 
60 vacancies, 40 are in engineering classes, out of 119 
engineering positions in total (approximately 33.6 
percent), and ten are in technical classes. Ms. Madden 
states that the PUC has initiated the hiring process for 11 
of the 40 vacant engineering positions. Ms. Madden 
advises that the majority of the remaining 49 vacant 
engineering positions are in classifications which now 
have eligible fists, and therefore hiring appointments 
could be made immediately. However, the hiring process 
has not been initiated for those 49 vacant positions 
because such positions are to work on capital 
improvement projects funded by the proposed revenue 
bonds which have yet to be approved by the voters. Ms. 
Madden states that the Utilities Engineering Bureau does 
plan to initiate the selection processes for these 49 vacant 
positions in the Fall of 2002, in advance of the voters' 
approval of the proposed revenue bonds, so that potential 
candidates can be hired and begin work as soon as the 
revenue bonds are approved. 

21. For FY 2002-2003, the PUC requested $1,849,491 to 
establish a Capital Improvement Program Team to 
manage the capital improvement program. The Budget 
Committee has recommended this request for approval by 
the Board of Supervisors. The requested $1,849,491 
includes $1,186,491 for 18 new positions (13.50 FTEs in 
FY 2002-2003) and $663,000 for contractual services, 
materials and supplies, and equipment. Ms. Madden 
states that the PUC has implemented a hiring plan to 
staff the new Capital Improvement Team by October 1, 
2002. Recruitment has been underway for some time for 
the program manager positions, and the PUC is initiating 
an examination process to establish a permanent list for 
such positions. Selections are currently being made from 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

16 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



the Senior Engineer and Association Engineer lists. The 
PUC intends to make all administrative and clerical 
appointments by October 1, 2002, according to Ms. 
Madden. Attachment IV, provided by the PUC, contains 
the proposed capital improvement program staffing plan 
and an explanation of the FY 2002-2003 capital 
improvement program objectives. 

Proposed Charter Amendment 15 

22. According to Ms. Vicki Clayton of the City Attorney's 
Office, a proposed Charter amendment (File 02-0887) 
would establish the PUC's exclusive control of water and 
clean water utilities; rate setting standards and methods; 
the transfer of surplus funds between utilities; 
independence in contracting; purchasing, hiring, and 
selection of contractors; reporting and planning 
requirements; and authorization of revenue bonds or 
other financing methods without voter approval, if this 
proposed Charter Amendment is adopted by the voters. 
Ms. Ostberg states that to the extent that this proposed 
Charter Amendment gives the PUC authority to issue 
bonds without voter approval, this Charter Amendment 
would negate the need for the proposed voter-approved 
revenue bond issuance of $1,628 billion in its current 
form. 

Fire Department 

23. While the PUC is responsible for managing the low- 
pressure water system, the Fire Department is 
responsible for managing the City's high pressure water 
system, the Auxiliary Water Supply System (AWSS). The 
Capital Improvements Advisory Committee expressed 
concern that the PUC has not consulted the Fire 
Department about the impact of its water system capital 
improvement projects on the AWSS. In Attachment I, Mr. 
Berry states that the proposed capital improvement 
program would not significantly affect, either positively or 
negatively, the performance or reliability of the Fire 
Department's AWSS. 



15 The other PUC Charter Amendment currently before the Rules and Audits Committee, File 01- 
2056, addresses PUC financing authority in relation to the power system only. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

17 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 

Revised 7/19/02 
Item 1 - File 02-0910 



Summary of the 
Issues Noted by the 
Budget Analyst: 



1. The Budget Analyst notes a number of issues which 
could impact the size of, and potential voter support for, 
the proposed revenue bond issuance: 

• The PUC's projected 174.3 percent increase in water 
rates payable by San Francisco residential and 
commercial ratepayers over the first 13 years of the 
capital improvement program would adversely impact 
San Francisco ratepayers. 

• The PUC will not be able to issue its proposed rate 
study report, which will ensure that rates are fairly 
distributed among customer classes, before the 
November of 2002 election. 

• The Proposition H water rate and sewer service charge 
freeze has had a negative impact on the PUC's credit 
ratings, increasing interest rates by an estimated 0.2 
percent, which increases debt service by $2,000,000 
annually for every $1 billion of revenue bonds issued. 
Proposition H does not expire until July 1, 2006. 

• The need for the proposed voter-approved revenue 
bond issue could be negated if voters approve a 
Charter Amendment proposed for the November of 
2002 ballot (File 02-0887) which would give the PUC 
authority to issue bonds without voter approval. 

2. The Budget Analyst notes that the PUC's Program 
Management Consultant contract with the San Francisco 
Water AUiance, now reconstituted as the Water 
Infrastructure Partners, has, to date, failed to (a) fully 
integrate PUC and contractor staff, and (b) provide 
significant, documented, and verifiable capital 
improvement program management savings despite the 
PUC's assurances to the Board of Supervisors that such 
savings are achievable. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

13 



Memo to Finance Committee 

July 22, 2002 Special Finance Committee Meeting 



Recommendation: 



3. The Budget Analyst also notes the PUC's historic 
difficulty in filling vacant engineering positions in the 
PUC's Utilities Engineering Bureau which is a key 
resource for implementing the proposed capital 
improvement program funded by the proposed revenue 
bonds. 

Approval of the proposed resolution is a policy matter for 
the Board of Supervisors. 




cc: Supervisor Peskin 
Supervisor Daly 
President Ammiano 
Clerk of the Board 
Controller 
Ben Rosenfield 
Ted Lakey 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

19 



Appendix 1 
Page 1 of 5 

APPENDIX 1: INDEPENDENT EVALUATIONS OF THE CAPITAL 
IMPROVEMENT PROGRAM 

R.W. Beck 

R.W. Beck's May 21, 2002 report on the capital improvement plan concluded that: 

• While supportive of the capital improvement program planning approach, Bay 
Area Water Users Association (BAWUA) members are frustrated by the PUC's 
slow progress in implementing the capital improvements. BAWUA has 
introduced State bills to create an agency which would allow BAWUA members 
to directly fund needed regional water system capital improvements. 

• BAWUA members are concerned whether the PUC intends to continue to be a 
regional water provider that will meet BAWUA members' water supply 
requirements for the long term. 

• The criteria for selecting, sizing, and measuring the performance of capital 
improvement program projects needs to be more fully developed, with 
quantifiable objectives and standards. 

• The proposed capital improvement projects are necessary to maintain the 
regional and local water systems. 

• The proposed capital improvement projects are at varying levels of definition 
and investigation, so the accuracy of the cost and schedule information varies. 
The PUC and its Program Management Consultant had endeavored to 
standardize the costs and schedules. R.W. Beck characterized this work as 
"diligent" and "methodical," stating that the approach followed by the PUC and 
the Program Management Consultant was "consistent with, and probably better 
than that used by most similar utility systems in preparing CIP programs." 

• The consolidated capital improvement program/long-range financial planning 
process clearly prioritizes projects, ensures better cost estimates, and provides a 
valid basis for approval and adoption. 

• Annual review of the capital improvement program by the PUC is appropriate. 

• Historically, the PUC has tracked capital improvement program costs by 
classification of project which makes it difficult to evaluate the performance of 
individual projects. 

• The long-range financial plan is logically constructed and is based on reasonable 
financial assumptions. 



20 



Appendix 1 
Page 2 of 5 

• Proposition H 1 poses serious threats to the PUC's ability to maintain satisfactory 
reserves and coverage ratios to support the debt that will be needed to fund the 
capital improvement program. 

• The community needs better information on the costs and trends in other cities 
facing similar issues. 

R.W. Beck further concluded that there is a significant risk that the planned level of 
project delivery will not be achieved, especially in the initial years of the program, 
because of: 

• The relative inexperience of the PUC's Capital Improvement Program Manager 
in implementing a capital improvement program of this magnitude and 
complexity. 

• The vacancy of the Assistant General Manager for Infrastructure position. 
According to Mr. Jeet Bajwa of the PUC, this position has been vacant since 
November of 2001. After several internal PUC candidates were considered, the 
PUC hired an external recruitment consultant to advertise the position in May 
of 2002. Ms. Ostberg advises that an interim Assistant General Manager for 
Infrastructure, Mr. Donald Birrer, a former PUC General Manager, was 
appointed on July 1, 2002, while the national recruitment search continues. The 
PUC expects to fill the position by September of 2002, according to Ms. Ostberg. 

• The PUC's cumbersome hiring practices. 

• The status of the program/project monitoring and controls system. Mr. Bajwa 
states that an evaluation of several control system tools is currently underway, 
with a decision expected to be made in December of 2002. 

• The potential 12 to 24 month delay in hiring a new program management 
services contractor if the current Program Management Consultant is replaced. 



1 Proposition H, approved by the voters on June 2, 1998, freezes water rates at their current levels 
until July 1, 2006, proposed to the following exceptions: 

• The rate freeze does not apply to the fees charged to customers located outside of San Francisco. 

• The rate freeze could be suspended if the City declared an emergency, as defined by Charter 
Section 3.100. 

• The rates could be increased to repay the money borrowed through the City's issuance of bonds 
for improvements to the water system approved by the voters in November of 1997 (Propositions 
A and B), but such increases cannot exceed a total of 18 percent during the period between July 
1, 1998 and July 1, 2006. 

• The rates could be increased to repay money borrowed from further improvements to the water 
system approved by voters in the future. 

The effective date of Proposition H, July 1, 1998 followed two years of rate freezes self-imposed by 
the PUC. Therefore, Proposition H froze rates at their 1996 levels through June 30, 2006, with the 
exception of the 18 percent increase allowed for debt service related to Propositions A and B Water 
Revenue Bonds. Of the $304,000,000 authorized by Propositions A and B, the issuance of 
$140,000,000 in Water Revenue Bonds during FY 2001-2002 necessitated an 8.65 percent average 
rate increase for retail customers. The anticipated issuance of the remaining $164,000,000 in Water 
Revenue Bonds during FY 2002-03 will necessitate a further 8.60 percent average rate increase for 
retail customers, for a compounded cumulative rate increase of 17.99 percent over two years, thereby 
hitting the 18 percent cap imposed by Proposition H (File 02-0904) 



21 



Appendix 1 
Page 3 of 5 

• The need for a tenfold increase in the rate of project delivery. The PUC has 
historically developed and implemented capital projects at a slow pace. 

• The lack of project accountability related to cost and schedule. 

• The lack of an Asset Management Plan to follow-up on capital improvement 
projects after completion. 

• The cumulative effect of all of the tasks scheduled to be accomplished over the 
next 12 months. 

Based on the above conclusions, R.W. Beck recommended that the PUC: 

• Coordinate with BAWUA to (a) refine the Regional Water Master Plan to reflect 
mutually agreeable performance standards, (b) conduct an integrated resources 
management plan, and (c) evaluate alternative regional associations for 
implementing critical regional water improvements. 

• Formally adopt the capital improvement program, establish a process for the 
annual update, reporting, and/or approval of changes, and declare that the PUC 
intends to be a long-term regional provider of water. 

• Continue to use the cost model, capital improvement program scheduling, and 
"optioneering" 2 tools developed over the last two years. 

• Make hiring an Assistant General Manager for Infrastructure a top priority to 
(a) manage external communications and expectations, and (b) develop a 
Business Plan with the Program Management Consultant. 

• Establish a joint venture between the PUC's Capital Improvement Program 
Group and the Program Management Consultant to establish a clear and 
integrated working relationship between the two organizations. Such an 
arrangement is not unusual in implementing major public sector projects with 
private consultants, according to R.W. Beck. 

• Develop a dual-track or contingency plan approach for capital improvement plan 
implementation during the first several years. 

• Develop an Asset Management Plan to track future system maintenance and 
capital replacement requirements. 

• Implement a capital improvement program oversight committee to conduct an 
annual review of the capital improvement program. 

• Implement an internal Technical Advisory Committee to provide oversight of 
individual capital improvement program projects. 

• Streamline PUC review and approval processes. 

• Capitalize interest over three years rather than two years to better represent the 
costs incurred prior to project commercialization. 



2 "Optioneering" is a process which uses alternative analyses to (a) identify the real project needs, 
(b) determine the appropriate evaluation criteria, (c) evaluate solutions against those criteria, (d) 
select the optimum project, (e) define the design base, and (f) obtain engineering and customer 
concurrence. The optioneering assessment should include capital and operating costs, specification 
requirements, environmental implications, and preliminary schedules. 



22 



Appendix 1 
Page 4 of 5 

Take the steps necessary to protect bond ratings given the capital improvement 
program's debt financing requirements. 

Review the formula for calculation of Suburban Water Revenue Requirements 
when the Master Water Sales Contract is renewed. If possible, the PUC should 
amend the Master Water Sales Contract (which is due to expire on June 30, 
2009) prior to any additional bond issues. If revenues can be more closely tied to 
debt service, the financial community's confidence should be enhanced. 



Blue Ribbon Panel 

In April and May of 2002, the R.W. Beck evaluation was reviewed by a Blue Ribbon 
Panel of professionals with expertise in water delivery, infrastructure, planning, 
finance, and other disciplines, convened by the San Francisco Planning and Urban 
Research Association (SPUR) 3 . The Blue Ribbon Panel concluded that the R.W. 
Beck evaluation was "very competent, comprehensive, rigorous, accurate and on 
target for this stage in the [capital improvement] program." The Blue Ribbon Panel 
further recommended that: 

• Develop project management and accounting mechanisms which allow for real- 
time assessment of project status and cost-run rates, and which are consistently 
applied to all capital improvement projects. 

• Fully integrate the Facilities Reliability Program (seismic) and the Water 
Supply Master Plan (conservation, desalination, and recycling), and develop 
detailed, regularly updated system recovery plans. 

• Clearly delineate seismic design, water reliability, and drought supply 
standards. The capital improvement program should be flexible enough to adapt 
to higher water treatment standards in the future. An analysis should be 
conducted of whether system replacement every 100 years is an acceptable life 
cycle . 

• Explain to the public the reasons for potential uncertainties in project cost 
estimates in order to allay public concerns about budget overruns. 



3 The panel members were (a) Jim Chappell, SPUR, (b) Margaret Bruce, Silicon Valley 
Manufacturing Group, (c) Dennis Diemer, East Bay Municipal Utility District, (d) David Dowall, 
University of California, (e) Jeanne Myerson, San Francisco Chamber of Commerce, (f) John Wise, 
Natural History Institute, and (g) Greg Zlotnick, Santa Clara Valley Water District. 



23 



Appendix 1 
Page 5 of 5 

Report on the projects planned and completed pursuant to Propositions A and 
B 4 , as well as an assessment of who those projects relate to the capital 
improvement program. 

Develop a larger policy context to guide implementation and define priorities in 
terms of environmental stewardship, environmental justice, stakeholder 
involvement, the PUC's role, regional service commitments, integrated resource 
planning, and regional crisis planning. Once policies and goals are established, 
they should be translated into performance measures. 

Streamline contracting procedures and incorporate penalties for cost overruns, 
sharing of cost savings, and bonuses for completion ahead of schedule. 
Clearly differentiate between projects which require permanent staff (for 
ongoing utility functions) and projects which require consultants (for time- 
defined tasks). 

Develop a rate structure which includes incentives for suburban customers to 
reduce peak water usage. Reduction of future peak demands could reduce the 
size of future facilities and, therefore, capital improvement program costs. 
Take account in the long-range financial plan of lower interest rates for bond 
money. 



4 In November of 1997, voters approved $157,000,000 of Water System Reliability and Seismic 
Safety Bonds and $147,000,000 of Safe Drinking Water Revenue Bonds, for a total of $304,000,000. 
According to Ms. Ostberg, the PUC spent the first 18 months planning and designing the 
construction projects and putting a commercial paper program into place. While the ordinances 
indicated that revenue bonds would be the ultimate funding source for the projects authorized by 
Propositions A and B, from July of 1999 the PUC used commercial paper to fund the initial 
expenditures because commercial paper provided greater flexibility and lower interest rates. The 
PUC issued $140,000,000 of these bonds in August of 2001, of which approximately $85,000,000 was 
used to refund outstanding commercial paper notes, and the remaining $164,000,000 is anticipated 
to be sold in FY 2002-03. The proceeds of that second issue will, after payment of issuance costs, be 
used to retire all outstanding commercial paper notes, and the remainder will be applied towards 
approved Proposition A and B projects. Of the seismic and safety projects, at February 28, 2002, 35 
percent were complete, 57 percent were underway, and 8 percent had not been started. Of the water 
quality projects, at February 28, 2002, 28 percent were complete and 72 percent were underway. 



24 



Appendix 2 
Page 1 of 2 

APPENDIX 2: FINANCING ISSUES 

Water Enterprise Credit Rating 

On June 10, 2002, the Budget Analyst issued a Review of Best Practices for 
Financing Large Capital Improvement Projects at Municipal Utilities in the State of 
California, which was prepared in conjunction with the Legislative Analyst's Office, 
the Mayor's Director of Public Finance, and the PUC. In that report, the Budget 
Analyst concluded that the Proposition H rate freeze has had a negative impact on 
the Water Enterprise's credit ratings. 

Prior to the rate freeze, Moody's rated the Water Enterprise as "Aa" and Standard 
and Poor's rated the Water Enterprise as "AA with a stable outlook." Now, Moody's 
rates the Water Enterprise as "Al" and Standard and Poor's rates it as "A+ with a 
stable outlook." Of the 12 major Californian public utilities surveyed by the 
Legislative Analyst's Office, the Water Enterprise (in combination with the Clean 
Water Enterprise) had the lowest Moody's and Standard and Poor's ratings. Both 
rating agencies advised the Legislative Analyst's Office that ratings upgrades would 
not occur until the Water Enterprise's financial profiles, as measured by factors 
such as debt service ratios, improve dramatically, coupled with reassurances that 
the capital improvement program would be implemented and supported with a 
credible and sustainable financial plan. Such financial improvements could only 
occur by increasing water service rates and obtaining rate-making authority to 
further increase water service rates in the future in order to ensure financial 
stability, flexibility over capital improvement program implementation, and funding 
authorization. 

Financial projections for the Water Enterprise indicate that its financial viability 
will largely be maintained through FY 2006-2007, and that the City will be able to 
meet the debt service coverage requirements contained in the Water Revenue Bond 
covenants 1 . However, these projections do not include funding the capital 
improvement program's water projects. The Mayor's Director of Public Finance, 
Ms. Monique Moyer, estimated that the Water Enterprise's lowered credit ratings 
would result in a 0.2 percent increase in interest rates if the PUC issued new 
revenue bonds today, which is $2,000,000 of additional debt service annually for 
every $1 billion of revenue bonds issued. 



1 Debt service coverage requirements in the revenue bond indentures require that net revenues, 
together with unappropriated fund balances, in each fiscal year must be equal to at least 1.25 times 
more than the revenue bond annual debt service due in that fiscal year. 



25 



Appendix 2 
Page 2 of 2 



Other Financing Options if Insufficient Voter Support 



According to the Long-Range Financial Plan, without additional voter-approved 
debt, capital investment in the water system will be limited to the approximately 
$20,000,000 annually which can be supported by operating revenues. Attachment I, 
provided by the PUC, explains the full range of options available to the PUC if the 
proposed bond measure was not passed by the voters. These options are: 

• Delaying projects until voter approval is secured. 

• Delaying replacement and repair projects until after the July 1, 2006 expiration 
of the Proposition H rate freeze, at which time three-quarters of the Board of 
Supervisors could approve such projects (barring any other voter-imposed 
restriction). 

• Losing PUC control of the regional water system to a regional financing 
authority. 

The Budget Analyst notes that there is also the option of entering into an 
agreement with regional water service customers, and perhaps with the State, to 
permit regional participants to directly finance regional projects and jointly assume 
the risks involved. Under this scenario, the city would pay one-third of the cost of 
such projects by making payments to a Joint Powers Authority formed by its 
customers. This approach would raise issues about the ownership of improvements, 
operation of the regional system, and the governance and powers of the Joint 
Powers Authority. 



Charter Section 9.107 

There are exceptions to the voter appi-oval requirement of Charter Section 9.107 
which mandates that the issuance of revenue bonds for the water system be 
approved by a simple majority of the electorate. Revenue bonds can be issued for 
the water system with a three quarters approval of the Board of Supervisors if the 
proceeds of such bonds are used to: (a) comply with a State or Federal order, (b) 
reconstruct or replace existing water facilities under the PUC's jurisdiction, or (c) 
create or maintain alternative energy sources. 

In Attachment I, Mr. Bill Berry of the PUC advises that "a portion of the projects 
for the local water system qualify for financing pursuant to this provision." 
However, Mr. Berry notes, as a result of the Proposition H rate freeze, rates could 
not be raised to fund debt service on bonds that do not have voter approval. 
Therefore, issuance of bonds under Charter Section 9.107 would be restricted until 
after July 1, 2006, and could be restricted by future voter action. 



26 



JUL -03-2202 17:31 



Or 



^Sgy 



FUC FINANCE 



Attachment I 



415 4S7 5258 P.01/e.b 



Page 1 of 6 
San Francisco Public Utilities Commission 



MEMORANDUM 




DATE: July 3, 2002 

TO: Board of Supervisors' Budget Analyst 

FROM: Bill Berry, Assistant General Manager 

for Finance &. Administration, SFPUC 

SUBJECT: Water Bond Measure (File 02-0910) 



cc: Patricia E. Martel, GM, SFPUC 



Summary 

This memorandum is intended to respond to certain questions raised by the Board of 
Supervisors' Budget Analyst In its review of the proposed bond measure for the Water 
Enterprise. 

Follow-up to rw Beck & Blue ribbon Panel 

As noted in the Budget Analyst's report, the SFPUC retained RW Beck to review its proposed 
Capital Improvement Program and Long-Range Financial Plan. RW Beck was selected by the 
SFPUC based on Beck's national reputation for providing Independent reviews associated 
with Bond Financings and capital programs In the water and wastewater areas, and because 
RW Beck had not provided other consulting or engineering services to the SFPUC in the 
past. 

RW Beck's report provides a review of three areas: 

n CIP Process: RW Beck reviewed the development and validity of the CIP as proposed 
by SFPUC staff. 

n CIP Implementation: RW Beck reviewed the SFPUC's ability to successfully deliver 
the proposed program in an efficient and timely manner. 

a CIP Revenue Requirements: RW Beck reviewed the proposed Long-Range Financial 
Plan. 

In general, RW Beck concluded that the proposed CIP was developed through a 
Comprehensive Process, that the OP projects are good and necessary, and that the CIP 
effort and level exceeded the norm. In addition, RW Beck concluded that the LRFP was 
logically constructed and functionally correct, and that the financial assumptions are 
reasonable. 

In its review of CIP implementation, RW Beck noted a number of challenges, including 
leadership concerns, staffing and hiring, and concerns related to the SFPUC's program 
management consultant. RW Beck provided a number of specific recommendations, with 
which the SFPUC concurs completely. The SFPUC has already initiated follow-up in a number 
of key areas: 

n Leadership: The SFPUC has hired Don Blrrer (formerly Executive Director of the 
Clean Water Program and General Manager of the SFPUC) as Interim Assistant 
General Manager for Infrastructure to provide high-level leadership to the CIP. The 
SFPUC's new CIP Group and its Utilities Engineering Bureau, led by Karen Kublck and 
Michael Quan, respectively, will report to Mr. Birrer. In addition, the SFPUC has a 
recruitment effort underway to Identify and hire a permanent AGM for Infrastructure, 



27 



JUL-03-2eaa :7:3i fuc FIWCS Attachment I 4l5 4S7 525a p -0^ 

Water Bond Measurs(FIu= 02-0910} -2- Page Z Ot 6 July 3, 2002 

with the expectation that this process will be completed by the end of September 
2002. 

a Program Management Consultant: With the concurrence of the Board of Supervisors, 
the SFPUC has retained the Water Infrastructure Partners, led by Jacobs Engineering 
and Primus Inc., as Its program management consultant following the departure of 
Bechtel from the San Francisco Water Alliance joint venture. 

h Staffing and Hiring: The SFPUC has undertaken a concerted effort to Identify and 
hire qualified candidates to fill positions critical to implementing the capital 
improvement program. The initial results of a widespread recruiting effort are 
encouraging and we expect to have the key positions filled within the next few 
months. 

B Other Recommendations: The SFPUC concurs with most of the implementation- 
related recommendations from RW Beck and is committed to implementing them 
under the direction of the AGM for Infrastructure and with the support of other 
departments of the SFPUC. 

As noted in the Budget Analyst's report, an independent Blue Ribbon Panel, at the request 
of the SFPUC's General Manager, reviewed the RW Beck evaluation. In addition to their 
conclusions about the excellent quality of RW Beck's review, the Panel provided a number of 
policy recommendations to the Commission. The SFPUC concurs with these 
recommendations and plans to implement them. 

Potential Impact of State Legislation 

The Budget Analyst's report notes the three bills under consideration by the California State 
Legislature that could impact San Francisco's control and operation of the Hetch Hetchy 
Water System. These bills are further described below: 

n SB 1870 (sponsored by State Senator Jackie Speier): This bill has been 
approved by the State Senate, Is now pending in the Assembly, and the Governor 
has indicated his intention to sign it. Effective January 1, 2003, SB1870 would 
establish the San Francisco Bay Area Regional Water System Financing Authority to 
assist in financing construction of projects on the regional Hetch Hetchy system. 
Upon passage, it would be possible for the Authority to issue revenue bonds on 
behalf of the wholesale customers of the water system to finance regional projects. 
The Senate has approved this legislation, but passage by the Assembly is not 
expected until August. The Governor has indicated he will sign it. 

This could effectively reduce the proposed bond measure by approximately $2 billion. 
It would still be necessary, however, for San Francisco voters to approve bond 
financing for the San Francisco share of the cost of capital improvement projects on 
the regional system (approximately $900 million for the proposed CIP) and to fund 
projects related to the local distribution system (estimated at $715 million). 

a AB1823 (sponsored by Assemblyman Lou Papan); AB1823 would require the 
City to adopt a Capital Improvement Program and Emergency Response Plan by 
February 2003. The City would be required to complete nine specific regional water j 

projects within a specific timeframe contained within the bill. The entire regional i 

Capital Improvement Program would be subject to oversight by the State '■ 

Department of Health Services (DHS), a role that heretofore they have not 
performed nor are equipped to perform within the state. The bill also further extends 
this DHS oversight on the operation and maintenance of the regional water system, I 

including budgets and power operations. There are many other portions of the bill i 

that the City has also found to be disagreeable. The City continues to oppose this bill 

i 

23 J 



JUL-03-2QQ2 17:32 FUC FINANCE A .. . _ 415 4S7 52=^3 p cr»v« 

Attachment I a< -^-' tl P.Q-^Gb 

Water Bond Measure (File 02-0910) -3- Pa § e 3 of ° July 3, 2002 

AB2058 (sponsored by Assemblyman Lou Papan): AB2058 creates the Bay 
Area Water Supply and Conservation Agency, which would have the ability to plan, 
finance, build, and operate facilities for collection, transmission, reclamation, reuse, 
and conservation. The Agency could also acquire water and water rights, develop 
and store water, and sell water. 

If SB 1870 (Speier) were enacted, the San Francisco Bay Area Regional water 
System Financing Authority would be charged with Issuing revenue bonds for the 
SFPUC's Regional Water Capital Improvement Program. In contrast, the Agency 
created by AB 2058 would be able to build various local water projects for the 29 
wholesale customers who have agreed to participate in the authority, separate and 
distinct from the Hetch Hetchy system, AB 2058 would not impact the SFPUC's CIP. 

R&.R Project Financing without Voter Approval (Charter Section 91 

Under Charter Section 9.107, the SFPUC may, upon vote of three-quarters of the Board of 
Supervisors, Issue revenue bonds "for the purpose of the reconstruction or replacement of 
existing water facilities" (R8lR Bonds). As a result of the Proposition H rate freeze, rates 
could not be raised to fund debt service on bonds that do not have voter approval. 
Therefore, Issuance of bonds under this provision of the Charter is restricted until after July 
1, 2006, and could be further restricted by future voter action. 

A portion of the projects for the local water system qualify for financing pursuant to this 
provision (an opinion of the City Attorney and Bond Counsel has been requested to further 
refine eligibility requirements). Therefore, It would be possible for the Board (upon the vote 
of three-quarters of the members) to approve the issuance of bonds for eligible projects 
beginning in four years. Voter approval would be necessary for non-R8tR projects, or the 
bulk of regional facilities, local recycling projects, and selected other projects. 

Available Options if Bond Measure Fails 

While there is evidence of strong public support for a bond measure intended to protect the 
water system, the following options are available if the proposed bond measure fails: 

h Non-R&R projects would have to be delayed until voter approval is secured. 

« Projects eligible for R&R status could be approved by three-quarters of the Board 
members for issuance after expiration of the Proposition H rate freeze. The CIP 
would have to be delayed until that time. 

a Given the need to complete regional system capital projects, there is a risk that the 
State Legislature would adopt legislation removing SFPUC control of the regional 
water system, authorizing the issuance of revenue bonds by the Financing Authority, 
and requiring surcharges for San Francisco retail customers to cover their allocable 
share of debt service on bonds, 

CIAC-Related Questio ns 

The Budget Analyst's report notes certain questions raised by the Controller and the Mayor's 
Director of Public Finance at the June 28, 2002, meeting of the Capital Improvement 
Advisory Committee (CIAC). While the SFPUC is meeting with the Controller and Director on 
July 3, 2002, to further discuss their concerns, the SFPUC believes that its CIP and Long- 
Range Financial Plan provide the most reasonable method of estimating future costs and 
providing for uncertainty in inflation, interest rate and other assumptions. A discussion of 
the specific questions mentioned in the Budget Analyst's report is provided below: 

e 
n Size of Proposed Bond Measure: The Commission has requested the Board place a 
$3.6 billion bond measure on the November ballot to finance water system 



JUL-03-2002 17:22 Puc FINfiNCE Attachment I 4l5 487 525a P.B**6 

Water Bond Measure (fiui 02-0910) "4- Pa S e k ot b July 3, 2002 

improvements. As noted elsewhere In this memorandum, the creation of a Regional 
Financing Authority by SB1870 would provide a new mechanism for financing the 
share of costs supported by our wholesale customers, and reduce the required bond 
authorization to approximately $1.6 billion. The SFPUC is reasonably certain that this 
legislation will be approved and Is willing to consider a reduction in the proposed 
ballot measure authorization at this time. 

The Controller and Finance Director have questioned whether the proposed bond 
authorization might be reduced by changes in various assumptions, including some 
discussed below. It is important to note that our Long-Range Financial Plan provides 
a conservative estimate of future costs based on the cost estimates for capital 
projects contained in the CIP. We recognize that actual results will vary based on a 
variety of factors, and that we cannot provide certainty that the estimates provided 
for this program will be achieved. Nevertheless, it is important to let our ratepayers 
know what kind of rate increases they can expect to fund this program. If the 
proposed projects are executed according to the CIP schedule, the current LRFP 
provides the best estimate of the amount of required bonds and rate impacts. 

a Impact of proposed Legislation: The potential Impact of the proposed Speier 
Legislation (SB1870) on the amount of bonds required has been addressed 
elsewhere In this memorandum. Financing projects on behalf of the regional 
wholesale customers using this mechanism represents a significant change in 
approach. Currently, costs allocated to the wholesale customers based on the Master 
Water Sales Contract. In general, projects must be completed and placed into 
service before the wholesale customers begin paying. The City must finance projects 
prior to that time, although capitalized interest Is assumed during construction so as 
not to burden City ratepayers. 

On the other hand, after projects are placed in rate base, the wholesale customers 
pay a rate of return (based on the City's embedded cost of capital) and straight-line 
depreciation. The City recovers its full cost over the life of an asset using this 
methodology. However, Che Initial combination of rate of return plus depreciation 
exceeds the City's incremental debt service attributable to the wholesale customer's 
two-thirds share of project costs. This "extra" revenue has been used to keep rates 
for City customers lower than they would be if all customers, retail and wholesale, 
paid a pro rata share of debt service at all times. 

Therefore, one impact of financing wholesale costs under SB1870 will be somewhat 
higher rate Increase estimates for City customers In the future. The SFPUC believes 
that this impact can be offset somewhat by the use of capitalized interest to phase in 
debt service costs gradually. 

Note that the change in methodology would not result in a shifting of the long-term 
burden of costs between City and wholesale customers, as the wholesale customers 
pay their full share of costs under the Contract. 

a Conservative Assumptions — Contingency and Management reserves: The CIP is 
built on cost estimates for each of the 77 Individual projects in 2003 dollars. These 
costs are escalated based on the length of construction for each project and a three 
percent annual inflation rate. There is an expected variance on each project cost 
estimate because the projects have not completed final design and engineering. The i 

San Francisco Water Alliance reviewed each estimate and conducted a statistical 
analysis to determine what the variability of the cost estimate for the entire program \ 

of 77 projects would be. They recommended a total 16 percent contingency and 
reserves to provide a 75 percent confidence of delivering the entire program within \ 

the overall cost estimate. Therefore, the program contains $409 million of i 



JUL-Q2-22Q2 17:33 FUC FINANCE .._ . . _ 415 4^7 52=9 P CKvoe 

Attachment: I aa ' i>t£i ° P-QS^Ob 

Water Bond Measure (File 02-0910) .5-Page 5 of 6 July 3, 2002 

contingency and reserves for this purpose. These provide a measure of protection 
against cost overruns on individual projects and unforeseen events or changes In 
regulations. Contingencies of this nature are recommended for capital projects and 
programs, and the SFPUC believes the level of such funds for this CIP is appropriate. 
This belief has been confirmed by the independent engineering firm, RW Beck, that 
reviewed the CIP and LRFP. 

a Amount of Capitalized Interest: The LRFP assumes that interest will be capitalized 
for two years at the bond interest rate (5.5 percent) for each capital project. Without 
capitalized interest, it would be necessary to raise rates earlier and in greater 
amounts than is shown in the LRFP. The Controller questioned whether the 
capitalized Interest assumption Is based on the fact that City ratepayers must "carry" 
the cost for wholesale customers while projects are under construction. Capitalized 
interest is necessary irrespective of this factor. Without It, rates would have to be 
increased more quickly. In addition, If the projects for the Suburban customers are 
financed through the Financing Authority, as expected, capitalized Interest will be 
more necessary to protect City ratepayers against higher rate increases required as a 
result of the loss of the incremental subsidy provided by the wholesale customers 
under the Contract. 

The capitalized Interest amounts are conservative in a different sense, however. It is 
assumed that interest will be capitalized at the bond rate. It Is the SFPUC's 
expectation that we will, use commercial paper or other short term instruments to 
fund a portion of construction costs. CP carries significantly lower interest rates. 
However, the SFPUC has chosen to assume the higher costs because it cannot be 
assured of access to the credit and liquidity markets for CP at all times. 
Nevertheless, to the extent CP is used, the SFPUC would need to issue fewer bonds 
than assumed by the LRFP. Note that RW Beck recommended the SFPUC capitalize 
interest for three rather than two years. The SFPUC believes that the use of CP 
mitigates against the need to increase the amount of capitalized interest assumed in 
the LRFP. 

a Impact of Proposition H or Subsequent Referenda: Proposition H effectively 
freezes rates at 1998 levels through fiscal year 2006. There remains the possibility 
of a similar measure taking effect in future years which would inhibit SFPUC's ability 
to raise rates to support bonds necessary to finance essential improvements to the 
system. 

a Alternative Scenarios using Charter Section 9.107 R&R Bonds without Voter 
Approval: There are some projects which, in our opinion, may be qualified as 
"reconstruction" projects and as such could be financed without voter approval 
pursuant to the Charter. (We have requested the City Attorney to formally define 
"reconstruction" projects as it relates to the Charter.) However, bonds can only be 
supported by an increase in rates, which cannot occur under the terms of Proposition 
H period. 

Fire Department AWSS System 

The Fire Department's Auxiliary Water Supply System (AWSS) is functionally independent of 
the SFPUC's water distribution system. The AWSS storage facilities - Twin Peaks Reservoir, 
Jones Street Tank and Ashbury Tank - are filled with potable water form the PUC system, 
however, once the water enters the AWSS system it is no longer potable. There are no 
other physical connections between the two systems. * 

I 

i 

i 



31 



JU.-Z2-22Q2 17:33 FUC FINPNGS Attachment I ^ l5 ^ S7 5253 P.Q^-QS 

Water Bono Measure (File 02-0910) -6- Page 6 of 6 July 3, 2002 

The AWSS system was conceived Following the 1906 earthquake and fire. The AWSS system 
is designed to withstand higher water pressures and ground movement than the SFPUC's 
potable water system. In addition to the system's storage facilities, the AWSS can be 
supplied with salt water by the Fire Department's two pump stations or by fire boats 
through manifolds on the water front. 

The AWSS system does not cover the entire City. The system coverage is most dense in the 
area north of Mission Street and east of Van Ness Avenue. Where it is available, however, it 
is routinely used by the SFFD in lieu of, or as a complement to, the water supply available 
through the SFPUC's distribution system. The AWSS's larger diameter lines and higher 
pressures make It a more effective fire fighting tool. 

The vast majority of the work proposed In the QP Is in the regional water system, local 
storage, and local transmission systems. Transmission lines convey water to and between 
storage facilities, and distribution lines convey water to customers. The Fire Department's 
low pressure hydrants are connected to the SFPUC's distribution lines. 

In summary,, the proposed QP, because of it emphasis on regional water supply and 
transmission, will not significantly effect, either positively or negatively, the performance or 
reliability of the Fire Department's AWSS. Nor will the CIP include improvements to the local 
water distribution system such that it would improve the reliability or performance of the 
AWSS. 

If you have any questions or desire additional information, please email me at 
wberrvOpuc.sf.ca.us or call me at (415) 554-2457. 



32 



Attachment II 



o 



r 



San Francisco Public Utilities Commission 



MEMORANDUM 




DATE: July 10, 2002 

TO: Board of Supervisors' Budget Analyst 

FROM: Bill Berry, Assistant General Manager 

for Finance & Administration, SFPUC 

SUBJECT: Water Bond Measure (File 02-0910) 



cc: Patricia E. Martel, GM, SFPUC 



The following illustrates the projected debt service relating to the Water Enterprise if the 
entire amount of $1,628 billion of proposed bonds are issued. Attached are the numerical 
data that supports this table. 



Projected Water Debt Service 









_ 140,000 - 

o 

S 120,000 - 




a 100,000 - 

> 


w 


</> 80,000 - 


^m r - .■-;■•_, 


» 60,000 - 


^m Proposed Bonds 


3 40,000 - 

c 


^^ - 


< 20,000 - 




-.-...; : ^48B9BH 




: O'^Hj 


<T O 


<& £ <$? B N S J? J? £ -J? & &> «ffc $ & & 

r ,1? .1? ,1? ,<£ ,1? ,$> ,1? , V , V ,1? ,V ,1? ,V 
^ ^ « A « A <c A « A ^ < A ^ O <c A « A <r 



If you have any questions or desire additional information, please email me at 
wberrv(apuc.sf.ca.us or call me at (415) 554-2457. 



33 



Attachment II 
fage Zot 3 



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34 



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35 



Attachment III 



DATE: 

TO: 

FROM: 



San Francisco Public Utilities Commission 



MEMO RAND U tit 




July 3, 2002 

Board of Supervisors' Budget Analyst 

Bill Berry, Assistant General Manager 
for Finance & Administration, SFPUC 



cc: Patricia E. Martel, GM, SFPUC 



SUBJECT: Water Bond Measure (File 02-0910) 

The following table compares the current monthly water bills of San Francisco to other 
California water utilities. 

Comparison of Monthly Water Bills* 



V\6lnut Creek (CCVvO) 

DuDlin-San Ramon Sam Disl. 

San Diego 

Palo Alto 

E3MUD 

Hayvard 

Fremont (ACWD) 

Sacramento 

San Jose 

Los Angeles 

San Franasco 

Santa Clara 



■^•±-i:-<44£6 



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S^|jsjf|e|j{|ij||5gjg3|?5i 



x-:-r*ri:&nSXi;?Z-'PE:£S.-B24.\ • 



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>^.m^^g^7;.^,*& 



.">-'=-/V;''. : - 1 39.68 



SO S5 S10 S15 S20 S25 $30 S35 



'Comparisons mnon$ utility rotes arc difficult, as some systems are subsidized by otlier tax receipts 



If you have any questions or desire additional information, please email me at 
wberrviaiouc.sf.ca.us or call me at (415) 554-2457. 



Attachment IV 
Page 1 of 2 



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37 



Attachment IV 
Page 2 of 2 



FISCAL YEAR 2002/2003 CIP PROGRAM OBJECTIVES 

The CIP will achieve the following objectives in Fiscal Year 02/03: 

Program Planning: 

■ Complete Phase I of the Facilities Implementation Plan - model various alternative 
designs to determine constructability and related costs 

■ Initiate CIP Environmental Review Process - begin programmatic and project level 
EER documentation to facilitate timely project implementation 

■ Establish Prioritization Procedures - implement annually to reflect current needs and 
changes in scope 

■ Identify and Prioritize Critical CIP Projects - facilitate the most critical projects 
moving ahead on a critical timeline 

■ Develop Project Specific Request for Proposals (RFPs) for years 1 & 2 - procure 
specialty planning, design and construction management professional services 

■ Establish CIP Performance Measurements - measure program performance based 
upon budget, schedule, and operability 

Develop Internal Procedures: 

■ Create an Enterprise Work Breakdown Structure (WBS) - Program Manager will 
control project scope, schedule, and budget through Project Controls using a WBS to 
capture and report project information, and provide current information to stakeholders 

■ Develop Procedures for Updating the Annual CIP Budget - develop process to 
provide current budget and schedule information to the SFPUC, the Board of Supervisors 
and the Stakeholders 

■ Develop Change Order Control/Approval Process - manage contracts and track 
budget more effectively on a real time basis 

■ Develop Construction Management Procedures - standardize documentation and 
control practices for project managers to more effectively manage projects during 
construction 

■ Review Skills Inventory and Develop Staff Training Plan - based upon the assessment 
of skills and CIP requirements, utilize staff from SFPUC, DPW, and other City 
Departments in the fields of engineering, project controls, project management and 
construction management, and provide training as appropriate 

Develop and Implement Information Systems: 

■ Select Project Control System - track scope of work, budget expenditures, schedules 
and resource needs to provide a comprehensive, accurate, and timely program report to 
accommodate an enlarged database 

■ Procure Project Control System - acquire software license agreement and training 

■ Develop Project Control System Implementation Plan - develop a phased installation 
plan, to be implemented by the CIP staff, beginning with a pilot project to test and refine 
the Project Control System 

• Procure Electronic Timecard System - this new system will replace the daily, manual 
timecards of engineering staff, by tracking project phases and engineering disciplines, to 
ensure more detailed, and timely reporting of labor costs 



3S 



Attachment V 
Page 1 of 2 



San Francisco Public Utilities Commission - Capital Improvement Program 

Local Water Projects 











SFPUC 




Start 
Project 


Construction 
Start 


In Service 
Date 


Proposal 


Project Trbe 


Cost 2003 $ 


Non-R&R Projects 










Lincoln Way Transmission Line 


2003 


2005 


2007 


511,175 


Groundwater Projects 


2003 


2005 


2007 


13,706 


Recycled Water 


2003 


2007 


2010 


102,73S 


Cross Town Transmission Main 


2005 


2007 


2009 


17,415 


Sunset Circulation Improvements 


2005 


2007 


2009 


6,771 


Rre Protection at CDD 


2006 


2008 


2008 


1,713 


Key Motorized and Other Critical Valves 


2006 


2008 


2009 


11,945 


Noe Valley Transmission Main Ph2 


2006 


2009 


2010 


8,736 


SEWPCP - Water reclamation 


2008 


2010 


2011 


7,194 


New Northwest Reservoir 


2008 


2010 


2011 


29,594 


Lake Merced Pump Station Essential Upgrade 


2009 


2012 


2014 


59,144 


Total Non-R&R Projects 


$270,128 


R&R Projects with Construction Starting Before 10/2006 










Pump Station Upgrades (Summit) 


2003 


2005 


2006 


$4,914 


Pump Station Upgrades (Crocker Amazon) 


2003 


2005 


2006 


2,829 


Pump Station Upgrades (Lincoln Park) 


2003 


2005 


2007 


1,942 


Res Rehab and Seismic Upgrade Summit 


2003 


2005 


2007 


16,190 


Tank Rehab and Seismic Upgrade Lincoln Park 


2003 


2005 


2007 


1,698 


Tank Rehab and Seismic Upgrade Le-Grande 


2003 


2004 


2005 


2,071 


Total R&R Projects with Construction Starting Before 10/2006 


$29,644 


R&R Projects w/ Construction Starting After 10/2006 










Pump Station Upgrades (Palo Alto) 


2004 


2007 


2008 


$1,857 


Pump Station Upgrades (Sky View - Aqua Vista)) 


2004 


2007 


2008 


1,373 


Pump Station Upgrades (Forest Knolls) 


2004 


2007 


2008 


2,466 


Res Rehab and Seismis Upgrade Potrero H 


2004 


2006 


2007 


9,584 


Tank Rehab and Seismic Upgrade Portero Heights 


2004 


2006 


2007 


2,049 


Pump Station Upgrades (Mount Davidson) 


2005 


2008 


2009 


1,618 


Tank Rehab and Seismic Upgrade Forest Knolls 


2005 


2006 


2008 


1,810 


Vehicle Service & Facility Upgrade 


2006 


2008 


2009 


4,177 


North University Mound System Upgrade 


2006 


2008 


2010 


18,351 


Pump Station Upgrades (McLaren Park) 


2006 


2009 


2010 


5,038 


Pump Station Upgrades (Potrero Heights) 


2006 


2008 


2009 


1,764 


Pump Station Upgrades (Forest Hill) 


2006 


2008 


2009 


1,529 


Tank Rehab and Seismic Upgrade Mount Davidson 


2006 


2008 


2009 


1,705 


Tank Rehab and Seismic Upgrade Forest Hill 


2006 


2008 


2009 


2,270 


Tank Rehab and Seismic Upgrade Hunters Point 


2006 


2007 


2009 


3,459 


Res Rehab and Seismic Upgrade Hunters Point 


2006 


2008 


2009 


5,832 


Reservoir Rehabilitation Stanford Heights 


2006 


2007 


2009 


9,519 


Total R&R Projects w/ Construction Starting After 10/2006 


$74,401 


R&R Projects Starting After 10/2006 










Pump Station Upgrades (LeGrande) 


2006 


2009 


2010 


$2,332 


Pump Station Upgrades (Vista Frandsco) 


2006 


2009 


2010 


1,611 


Tank Rehab and Seismic Upgrade McLaren #1 


2006 


2009 


2010 


6,899 


Tank Rehab and Seismic Upgrade McLaren *2 


2006 


2009 


2010 


6,854 


Fulton @ 6th Ave 30" Main Replacement 


2007 


2009 


2011 


3,578 


Res Rehab and Seismic Upgrade Sutro 


2009 


2010 


2012 


22,407 


Total R&R Projects Starting After 10/2006 


$43,681 


Total 2003 $ Project Costs 








$417,854 


Total Escalated Project Costs 








$503,668 


Total Bond Size (including contingency and financing costs) 








$714,938 



39 



Attachment V 
Page 2 of 2 



San Francisco Public Utilities Commission - Capital Improvement Program 
Local Share of Regional Water Projects 











SFPOC 




Start 
Project 


Construction 
Start 


In Service 
Date 


Proposal 


Project Trtie 


Cost 2003 $ 


Non-R&R Projects 










Alameda Creek Fishery Enhancement 


2003 


2004 


2007 


$2,110 


Calaveras Dam Replacement 


2003 


2006 


2009 


47,025 


Crystal Springs Bypass Tunnel 


2003 


2007 


2009 


15,513 


Irvington Tunnel Alternatives 


2003 


2006 


2009 


45,122 


Pipeline Repair Plan & Readiness Imp 


2003 


2003 


2004 


1,056 


Enlarge Sunol Treatment Capacity to 240 mgd 


2004 


2007 


2009 


25,699 


SJPL Not New 


2004 


2009 


2011 


122,698 


Hetch Hetchy Advanced Disinfection - UV 


2006 


2010 


2011 


15,877 


Bay Division Pipeline - Hydraulic Capacity Upgrade 


2006 


2010 


2013 


78,052 


BDPL Nos 3 & 4 Cross Connections 


2006 


2009 


2010 


3,440 


Lawrence livermore Filtration 


2008 


2010 


2011 


565 


Standby Power Facilities,Various Locations 


2010 


2012 


2013 


1,724 


Installation of SCADA System (Phase II) 


2010 


2013 


2014 


9,002 


San Andreas #3 P/L Installation 


2010 


2013 


2014 


7,940 


Sunol Quarry Reservoirs 


2011 


2013 


2014 


2,790 


Water System Automation (Hetch Hetchy) 


2012 


2014 


2015 


406 


Total Non-R&R Projects 


$379,018 


R&R Projects with Construction Starting Before 10/2006 










SVWTP - New Treated Water Reservoir 


2003 


2006 


2007 


$14,728 


San Antonio Pump Station / Emergency Power 


2003 


2005 


2005 


1,155 


Tesla Portal Disinfection Facility 


2004 


2006 


2008 


3,296 


HTWTP Short Term Improvements - Phase A 


2004 
006 


2006 


2007 


939 


Total R&R Projects with Construction Starting Before 10/2 


$20,119 


R&R Projects with Construction Starting After 10/2006 










Seismic Upgrade Of BDPL's @Hayward Fault 


2006 


2009 


2010 


$13,168 


Adit Leak Repairs(Crystal Springs / Calaveras Res) 


2006 


2007 


2007 


688 


Crystal Springs PS and CS-SA PL Capacity 


2006 
36 


2009 


2011 


18,236 


Total R&R Projects with Construction Starting After 10/20 


$32,092 


R&R Projects Starting After 10/2006 










BDPL #1 & #2 Repair of Caisson & Pipe Bridge 


2007 


2011 


2013 


$5,928 


U. Mound Rsvr - Seismic Upgrade/Rehab (North Basin) 


2007 


2010 


2011 


20,225 


HTWTP Short Term Improvements Phase B 


2008 


2011 


2012 


3,159 


Lower Crystal Springs Dam Improvements 


2009 


2012 


2014 


5,295 


Sunset Rsvr - Seismic Upgrade/Rehab (North Basin) 


2009 


2012 


2014 


14,062 


HTWTP Long-Term Improvements 


2011 


2014 


2016 


11,722 


Cross Connection Controls 


2012 


2014 


2015 


1,221 


Early Intake Res-Resurface Dam (Hetch Hetcty) 


2012 


2014 


2015 


397 


Early Intake Res-Spillway +AdJ. Weir( Hetch Hetchy) 


2012 


2014 


2015 


510 


Pulgas Reservoir Rehabilitation 


2012 


2015 


2016 


4,946 


Capuchino Valve Lot capacity Improvements 


2012 


2015 


2016 


521 


Mountain Tunnel Lining (Hetch Hetchy) 


2012 


2014 


2015 


770 


Crystal Springs 2 PL Replacement (In City) 


2012 


2013 


2015 


18,496 


Foothill Tunnel Repairs (Hetch Hetchy) 


2012 


2014 


2015 


957 


Total R&R Projects Starting After 10/2006 


$88,208 


Total 2003 $ Project Costs 








$519,437 


Total Escalated Project Costs 








$643,336 


Total Bond Site (including contigency and financing costs] 








$913,154 



40 




City and County of San Francisco Cit y Ha11 

J ** 1 Dr. Carlton B Goodlett Place 

fleeting Agenda San Francisco ' CA 9 ^ 02 - 46 ^ 

^Finance Committee 

Members: Supervisors Aaron Peskin, Chris Daly and Sophie Maxwell 

Clerk: Gail Johnson 

Wednesday, July 31 , 2002 1 2:30 PM City Hall, Room 263 

Regular Meeting 



Note: Each item on the Consent or Regular agenda may include the following documents: 

1) Legislation 

2) Budget Analyst report 

3) Legislative Analyst report 

4) Department or Agency cover letter and/or report 

5) Public correspondence 

These items will be available for review at City Hall, Room 244, Reception Desk. 



Each member of the public will be allotted the same maximum number of minutes to speak as set by 
the Chair at the beginning of each item, excluding City representatives, except that public speakers 
using translation assistance will be allowed to testify for twice the amount of the public testimony 
time limit. If simultaneous translation services are used, speakers will be governed by the public 
testimony time limit applied to speakers not requesting translation assistance. 



AGENDA CHANGES 
REGULAR AGENDA 



021141 [Agreement for Stadium Advertising and Naming Rights] 
Supervisor Maxwell 

Ordinance approving and authorizing an agreement with the San Francisco Forty Niners, Ltd., for 
stadium advertising and naming rights and for the performance of certain capital repairs at the stadium 
located at Candlestick Point. 

6/24/02. RECEIVED AND ASSIGNED to Finance Comrruttee Sponsor requests this item be scheduled for consideration at 
the July 17. 2002 Finance Committee meeting. 



DOCUMENTS DEPT. 
JUL 2 6 2002 

SAN FRANCISCO 
PUBLIC LIBRARY 



City and County of San Francisco I Printed at 6:26 PM on 7/24/02 



Finance Committee Meeting Agenda Wednesday, July 31, 2002 

2. 021292 [Business Tax] 

Supervisor McGoldrick 

Motion submitting the San Francisco Business Tax Reform Ordinance 2002 to the qualified electors 
of the City and County of San Francisco, at the November 5, 2002 general municipal election. 

7/17/02. PREPARED IN COMMITTEE AS A MOTION. Continued to 7/24/02. 

7/17/02. CONTINUED. 

7/17/02. RECEIVED AND ASSIGNED to Finance Committee. 

7/24/02. AMENDED. AN AMENDMENT OF THE WHOLE BEARING SAME TITLE. Heard in Committee. Speakers: 

Supervisor McGoldrick; Supervisor Peskin; Ed Harrington, Controller; Supervisor Daly, Supervisor Hall; Steven Cornell, 

President. Small Busienss Commission; Margaret Brodkin, Coleman Advocates for Children; Jim Mathias, S. F. Chamber of 

Commerce; Julie Van Nostern, Deputy City Attorney; Amy Laitinen, SEIU; John Cope. Hotel Council of S. F.; Todd 

Robinette, Equity Office Properties; Nathan Nayman, Executive Director, Committee on Jobs: Scott Hauge, Small Business 

Advocates: Clifford Waldeck; Howard Wallace, Local 250; Garret Jenkins; Marjie O'Drisscal; Rebecca Vilkomerson. People's 

Budget; John Crapo, Director, S. F. Center for Economic Development; Jim Fabris, S. F. Association of Realtors; Dorji 

Roberts. Deputy City Attorney; Rolph Mullen Lane Andersson, Boston Properties; Larry Volentine; Michael Freeman, 

McCarthy Cook & Company; Patricia Bresslin, Golden Gate Restrauant Association; Ken Cleveland, Building Owners & 

Managers Association; Chris Boman; Roger Bazeley, Theodore Brown. 

Amendment of the Whole; Supervisor Daly withdrew his sponsorship; Supervisor McGoldrick add as sponsor. 

7/24702. CONTINUED AS AMENDED. Condnued to July 31 , 2002. 



City and County of San Francisco 2 Printed at 6:26 PM on 7/24/02 






Finance Committee Meeting Agenda Wednesday, July 31, 2002 

3. 021294 [Business Tax] 

Supervisor McGoldrick 

Ordinance amending the Business and Tax Regulations Code to: (1) enact a new Article 12- A- 1 
(Gross Receipts Tax Ordinance) to impose a gross receipts tax on persons engaging in business in San 
Francisco as a lessor of real estate; (2) amend Article 12- A (Payroll Expense Tax Ordinance) to (i) 
reduce businesses' taxable payroll expense by the amount of payroll expense attributable to their San 
Francisco business activities taxed under Article 12- A- 1 (Gross Receipts Tax Ordinance), (ii) 
conform Article 12-A (Payroll Expense Tax Ordinance) with the enactment of Article 12-A-l (Gross 
Receipts Tax Ordinance) and amendments to Article 6 (Common Administrative Provisions), (iii) 
repeal the $500 surplus business tax revenue credit set forth in Section 906E, and (iv) consolidate 
exemptions, definitions and other administrative provisions, as amended, that apply to Article 12-A 
(Payroll Expense Tax Ordinance) and other Articles of the Business and Tax Regulations Code, and 
place them in Article 6 (Common Administrative Provisions); (3) amend Article 12 (Business 
Registration Ordinance) to conform business registration requirements with the enactment of Article 
12-A-l (Gross Receipts Tax Ordinance) and amendments to Article 12-A (Payroll Expense Tax 
Ordinance) and Article 6 (Common Administrative Provisions); (4) amend Article 6 (Common 
Administrative Provisions) to (i) clarify common administrative provisions and conform them with the 
enactment of Article 12-A-l (Gross Receipts Tax Ordinance) and amendments to Article 12-A 
(Payroll Expense Tax Ordinance) and Article 12 (Business Registration Ordinance), (ii) consolidate 
exemptions, definitions and other administrative provisions that apply to Article 12-A (Payroll 
Expense Tax Ordinance), Article 12-A-l (Gross Receipts Tax Ordinance), Article 12 (Business 
Registration Ordinance) and other Articles of the Business and Tax Regulations Code, and (iii) 
eliminate the Board of Review; and (5) amend Section 501 of Article 7 to clarify the definition of 
"Permanent Residents" exempt from the tax on the transient occupancy of hotel rooms. 

7/17/02, RECEIVED AND ASSIGNED to Finance Committee. 

7/17/02, PREPARED IN COMMITTEE AS AN ORDINANCE. Continued to 7/24/02. 

7/17/02, CONTINUED. 

7/24/02, AMENDED, AN AMENDMENT OF THE WHOLE BEARING SAME TITLE. Heard in Committee. Speakers: 

Supervisor McGoldrick; Supervisor Peskin; Ed Harrington, Controller, Supervisor Daly, Supervisor Hall; Steven Cornell, 

President, Small Busienss Commission; Margaret Brodkin, Coleman Advocates for Children; Jim Mathias, S. F. Chamber of 

Commerce; Julie Van Nostern, Deputy City Attorney; Amy Laitinen, SEIU; John Cope, Hotel Council of S. F.; Todd 

Robinette, Equity Office Properties; Nathan Nayman, Executive Director, Committee on Jobs; Scott Hauge, Small Business 

Advocates; Clifford Waldeck; Howard Wallace, Local 250; Garret Jenkins; Marjie O'Drisscal; Rebecca Vilkomerson, People's 

Budget; John Crapo, Director, S. F. Center for Economic Development; Jim Fabris, S. F. Association of Realtors; Dorji 

Roberts, Deputy City Attorney; Rolph Muller; Lane Andersson, Boston Properties; Larry Volentine; Michael Freeman, 

McCarthy Cook & Company; Patricia Bresslin, Golden Gate Restrauant Association; Ken Cleveland. Building Owners & 

Managers Association; Chris Boman; Roger Bazeley, Theodore Brown. 

Amendment of the Whole, Supervisor Daly withdrew his sponsorship; Supervisor McGoldrick added as sponsor. 

7/24/02, CONTINUED AS AMENDED. Continued to July 31, 2002. 



City and County of San Francisco 3 Printed at 6:26 P,\t on 7/24/02 



Finance Committee 



Meeting Agenda 



Wednesday, July 31, 2002 



011178 [Motor Vehicle for Hire Permit Filing Fees and License Fees] 

Ordinance amending Sections 2.26. 1 and 2.27. 1 of the Police Code to amend schedules for motor 
vehicle for hire permit filing fees and license fees. (Taxi Commission) 

8/2/01 , RECEIVED AND ASSIGNED to Finance Committee. 

5/1/02. CONTINUED. Speakers: None. 

Continued to 5/8/02. 

5/8/02. RECOMMENDED. Heard in Committee. Speakers: Harvey Rose. Budget Analyst; Theodore Lakey, Deputy City 

Attorney; Naomi Little, Executive Director, Taxicab Commission. 

5/8/02. REFERRED. Transferred to Budget Committee. 

6/25/02, MEETING RECESSED. Heard in Committee. Speakers: Bruce Oka; Jim Kennedy; Mark Newburg; Ann; Manuel; 

Joseph Fleischman; Howard Green; Paul Gillesppi; Jim Nakamora, Naomi Little, Taxicab Commission; Supervisor 

Ammiano; Supervisor McGoldrick; Supervisor Yee. 

Recessed to meeting of June 27, 2002. 

6/27/02, AMENDED, AN AMENDMENT OF THE WHOLE BEARING SAME TITLE. Heard in Committee. Speakers: 

Naomi Little, Executive Director. Taxicab Commission; Ruach Graffis; Charles; Jim Nakamora; John Bardis; Supervisor 

Ammiano. 

Amendment of the Whole further increasing fees. To Be transferred to Finance Committee to be heard on July 17, 2002. 

6/27/02. CONTINUED TO CALL OF THE CHAIR AS AMENDED. 

7/1/02, TRANSFERRED to Finance Committee. 

7/17/02, AMENDED, AN AMENDMENT OF THE WHOLE BEARING SAME TITLE. Heard in Committee. Speakers: 

Harvey Rose, Budget Analyst: Naomi Little, Executive Director, Taxicab Commission; Mark Gruberg, United Taxicab 

Workers; Ruach Graffis, United Taxicab Workers; Richard Ow; Joseph Fleischman, Communications Director, PDA; Walter 

Derby; Male Speaker; James Kennedy; Charles Rathbone; Henry Kim, Executive Director, San Francisco Taxi Association, 

Rob Walter; Jim Nakamura; Theodore Lakey, Deputy City Attorney; Ben Rosenfield, Mayor's Budget Office. 

Continued to 7/24/02. 

7/17/02, CONTINUED. 

7/24/02, CONTINUED. Heard in Committee. Speakers: Rusach Graffis, United Taxicab Workers; Supervisor Daly; Ted 

Lakey, Deputy City Attorney. 

Continued to July 31 , 2002. 



020483 [Donation of Equipment] 

Resolution authorizing a donation of one surplus Police van to the City of Concord, California, for use 
in its Police Department's emergency response efforts. (Police Department) 

4/3/02, RECEIVED AND ASSIGNED to Finance Committee. 



021237 [Contracting out City Services] 

Resolution concurring with the Controller's certification that assistance to certain victims of crime and 
education in community anti-street violence can be practically performed for the District Attorney's 
Victim Witness Assistance Program by a private contract at a lower cost than similar work services 
performed by City and County employees. (District Attorney) 



(Public Benefit Recipient.) 

7/17/02, RECEIVED AND ASSIGNED to Finance Committee. 



Ciry and County of San Francisco 



Printed at 6:26 PM on 7/24/02 



Finance Committee 



Meeting Agenda 



Wednesday, July 31, 2002 



020794 [Ellis-O'Farrell Parking Garage Bond Refinancing] 
Mayor 

Resolution approving and authorizing the issuance of City of San Francisco Ellis-O'Farrell Parking 
Corporation Parking Revenue Refunding Bonds to refund in part bonds previously issued by the City 
of San Francisco Ellis-OFarrell Parking Corporation; approving a bond indenture modifying the 
maximum amount of the contingent reserve fund; authorizing and ratifying the execution and delivery 
of documents reasonably necessary for the issuance, sale and delivery of such refunding bonds; and 
ratifying previous actions taken in connection therewith. (Mayor) 

(Fiscal impact.) 

5/13/02, RECEIVED AND ASSIGNED to Finance Committee. 

6/5/02, CONTINUED TO CALL OF THE CHAIR. Heard in Committee. Speakers: Harvey Rose, Budget Analyst. Monique 
Moyer, Mayor's Office of Public Finance; Ronald Szeto, Acting Director, Parking Authority; Mr. Pang; Anson Lee, Manager, 
Ellis-O'Farrell Parking Corporation. 



020663 [Extension of Sunset Clause - Utilization of BidTRFP Process for Awarding of Parking 
Authority Leases and Management Contracts] 

Ordinance amending Section 17.11 (a) of the San Francisco Administrative Code to extend the 
authorization of the Parking Authority to utilize a Bid/RFP process for the awarding of all leases and 
management agreements for the use or operation of parking facilities. (Parking and Traffic 
Department) 

4/24/02. RECEIVED AND ASSIGNED to Finance Committee. 



ADJOURNMENT 



IMPORTANT INFORMATION 

NOTE: Persons unable to attend the meeting may submit to the City, by the time the proceeding 
begins, written comments regarding the agenda items above. These comments will be made a part of 
the official public record and shall be brought to the attention of the Board of Supervisors. Any 
written comments should be sent to Committee Clerk, Finance Committee, San Francisco Board of 
Supervisors, 1 Dr. Carlton B. Goodlett Place, Room 244, San Francisco, California 94102 by 5:00 
p.m. on the day prior to the hearing. Comments which cannot be delivered to the committee clerk by 
that time may be taken directly to the hearing at the location above. 



LEGISLATION UNDER THE 30-DAY RULE 



(Not to be considered at this meeting) 

Rule 5.42 provides that when an ordinance or resolution is introduced which would CREATE OR 
REVISE MAJOR CITY POLICY, the committee to which the legislation is assigned shall not consider 
the legislation until at least thirty days after the date of introduction. The provisions of this rule shall 
not apply to the routine operations of the departments of the City or when a legal time limit controls 
the hearing timing. In general, the rule shall not apply to hearings to consider subject matter when 
no legislation has been presented, nor shall the rule apply to resolutions which simply URGE action 
to be taken. 



City and County of San Francisco 



Printed at 6:26 PM on 7/24/02 



F inance Committee Meeting Agenda Wednesday, July 31, 2002 

021221 [Laws and procedures governing the enforcement of prevailing wages for workers on public 
work projects] 
Supervisor Ammiano 

Ordinance adding subsection 6.1(H), definition of prevailing wage; amending subsection 6.22(A)(6) 
to include a requirement concerning subcontractor licenses; amending subsection 6.22(B) to include a 
requirement that all contractor and subcontractors provide workers' compensation insurance 
certificates; amending subsection 6.22(E) concerning application and enforcement of prevailing wage 
requirements and assessment of penalties and backwages; amending subsection 6.22(0) to add further 
contractual requirements for the employment of apprentices and to add penalties for noncompliance; 
adding subsection 6.22(P) concerning safety requirements for contractors and subcontractors; 
amending section 6.24 to expand the authority of the Office of Labor Standards Enforcement to 
enforce requirements of state and federal law, to enforce working conditions and apprenticeship and 
to assess monetary penalties and backwages against public work contractors. 

7/8/02. ASSIGNED UNDER 30 DAY RULE to Finance Committee, expires on 8/7/2002. 



City and County of San Francisco 6 Printed at 6:26 PM on 7/24/02 



Finance Committee Meeting Agenda Wednesday, July 31, 2002 

Meeting Procedures 

The Board of Supervisors is the Legislative Body of the City and County of San Francisco. The Board has 

several standing Committees where ordinances and resolutions are the subject of hearings at which members of 

the public are urged to testify. The full Board does not hold a second public hearing on measures which have 

been heard in committee. 

Board procedures do not permit: 1) persons in the audience at a Committee meeting to vocally express support 

or opposition to statements by Supervisors or by other persons testifying; 2) ringing and use of cell phones, 

pagers, and similar sound-producing electronic devices; 3) signs to be brought into the meeting or displayed in 

the room; 4) standing in the meeting room. 

Citizens are encouraged to testify at Committee meetings and to write letters to the Clerk of a Committee or to 

its members, City Hall, 1 Dr. Carlton B. Goodlett Place, Room 244, San Francisco, CA 94102. 

Agenda are available on the internet at www.ci.sf.ca.us/bdsupvrs.bos.htm. 

THE AGENDA PACKET IS AVAILABLE FOR REVIEW AT CITY HALL, ROOM 244, RECEPTION DESK. 

Board meetings are televised on channel 26. For video tape copies and scheduling call (415) 557-4293. 

Requests for language translation at a meeting must be received no later than noon the Friday before the 

meeting. Contact Ohn Myint at (415) 554-7704. 

AVISO EN ESPANOL: La solicitud para un traductor en una reunion debe recibirse antes de mediodia de el 

viemes anterior a la reunion. Llame a Erasmo Vazquez (415) 554-4909. 



Disability Access 

Both the Committee Room (Room 263) and the Legislative Chamber are wheelchair accessible. The closest 

accessible BART Station is Civic Center, three blocks from City Hall. Accessible MUNI lines serving this 

location are: #47 Van Ness, and the #71 Haight/Noriega and the F Line to Market and Van Ness and the Metro 

stations at Van Ness and Market and at Civic Center. For more information about MUNI accessible services, 

call 923-6142. 

There is accessible parking in the vicinity of City Hall at Civic Center Plaza and adjacent to Davies Hall and the 

War Memorial Complex. 

The following services are available when requested by 4:00 p.m. of the Friday before the Board meeting: 

For American Sign Language interpreters, use of a reader during a meeting, or sound enhancement system, 
contact Ohn Myint at (415) 554-7704. 

For a large print copy of agenda or minutes in alternative formats, contact Annette Lonich at (415) 554-7706. 
The Clerk of the Board's Office TTY number for speech-hearing impaired is (415) 554-5227. 
In order to accommodate persons with severe allergies, environmental illness, multiple chemical sensitivity or 
related disabilities, attendees at public meetings are reminded that other attendees may be sensitive to various 
chemical based products. 



City and County of San Francisco Printed at 6:26 PM on 7/24/02 



Finance Committee Meeting Agenda Wednesday, July 31, 2002 

Know Your Rights Under the Sunshine Ordinance 

Government's duty is to serve the public, reaching its decisions in full view of the public. Commissions, boards, 
councils and other agencies of the City and County exist to conduct the people's business. The Sunshine 
Ordinance assures that deliberations are conducted before the people and that City operations are open to the 
people's review. For information on your rights under the Sunshine Ordinance (Chapter 67 of the San Francisco 
Administrative Code) or to report a violation of the ordinance, contact Donna Hall; by mail to Sunshine 
Ordinance Task Force, 1 Dr. Carlton B. Goodlett Place, Room 409, by phone at (415) 554-7724, by fax at (415) 
554-7854 or by email at Donna.Hall@sfgov.org 

Citizens may obtain a free copy of the Sunshine Ordinance by contacting Ms. Hall or by printing Chapter 67 of 
the San Francisco Administrative Code on the Internet, at http://www.sfgov.org/bdsupvrs/sunshine.htm 

Lobbyist Registration and Reporting Requirements 

Individuals and entities that influence or attempt to influence local legislative or administrative action may be 
required by the San Francisco Lobbyist Ordinance [SF Campaign & Governmental Conduct Code Sec. 2.100] to 
register and report lobbying activity. For more information about the Lobbyist Ordinance, please contact the 
San Francisco Ethics Commission at 30 Van Ness Avenue, Suite 3900, San Francisco, CA 94102; telephone 
(415) 581-2300; fax (415) 581-2317; web site www.sfgov.org/ethics 



City and County of San Francisco 8 Printed at 6:26 PM on 7124102 



FINANCE COMMITTEE 

S.F. BOARD OF SUPERVISORS 

CITY HALL. ROOM 244 

1 DR. CARLTON GOODLETT PLACE 

SAN FRANCISCO. CA 94102-4689 

IMPORTANT HEARING NOTICE!!! 



*b 



//ex 



CITY AND COUNTY 




[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 

OF^AN FRANCISCO 



/BOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 

July 25, 2002 



TO: ^Finance Committee 

FROM: -Budget Analyst 

SUBJECT: July 31, 2002 Finance Committee Meeting 

Item 1 - File 02-1141 

Department: Recreation and Park Department (RPD) 



DOCUMENTS DEPT. 
JUL 2 9 2002 

20 
PUELIC LIBRARy 



Item: 



Description: 



Ordinance approving and authorizing a new agreement 
between the RPD and the San Francisco Forty Niners, Ltd. 
(49ers), for stadium advertising and naming Tights and for 
the performance of certain capital repairs at the City's 
Stadium located at Candlestick Point. 

The proposed ordinance would authorize a new Agreement 
between the City and the Forty Niners, Ltd., (49ers), which 
would give to the 49ers the exclusive right to (a) sell all 
advertising on or related to the scoreboards and signage at 
the stadium located at Candlestick Point (Stadium) and (b) 
sell the naming rights to the Stadium for the duration of 
the Stadium Lease agreement between the City and the 
49ers, for the next five years and ten months. The Lease 
agreement expires on May 31, 2008. In exchange for the 
exclusive right to sell advertising and naming rights, the 
49ers would perform certain capital repairs to the Stadium, 
operate and maintain the scoreboards and signage and 
would pay the City an advertising use fee and a naming 
rights use fee. 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



Scoreboards and Signage Advertising 

Under the proposed Agreement, the 49ers would have the 
exclusive right to sell year-round advertising on or related 
to Stadium scoreboards and signage. The 49ers will select 
the advertising sponsors and advertising copy, subject to 
approval by the Recreation and Park Department (RPD) 
General Manager. 

Previously, the City had an Agreement with Sony 
Corporation of America from March 1, 1987 through March 
31, 2001 (or 14 years and 1 month) for the purchase, use, 
and operation of the stadium scoreboard and signage. After 
the original contract expired on March 31, 2001, the City 
and the 49ers entered into a nine month agreement, for the 
period from May 1, 2001 to January 31, 2002, which was 
not subject to Board of Supervisors approval, granting the 
49ers the exclusive right to operate and sell scoreboard and 
signage advertising space in exchange for the pajnnent of a 
advertising use fee by the 49ers to the City and 
performance of stadium capital repairs by the 49ers on the 
City's behalf. Under this nine month agreement, the 49ers 
paid to the City $110,000 for the advertising use fee. In 
addition, the 49ers performed stadium capital repairs of 
$322,000 in value, and spent $170,000 for operation and 
maintenance of the scoreboards and signage, for total 
benefits to the City of $602,000. Attachment I, provided by 
RPD provides further details on payments made by the 
49ers to the City and compares the terms of the proposed 
Agreement to the terms of the prior agreements. 

The proposed Agreement states, "the 49ers shall pay the 
City an annual use fee of Six Hundred and Twenty-Five 
Thousand Dollars ($625,000) beginning in Year 1 and 
increasing each year thereafter at a rate of four percent 
(4%) annually during the Term (e.g., for the 2003-04 
season, the fee shall be Six Hundred and Fifty Thousand 
Dollars ($650,000); for the 2004-05 season, the fee shall be 
Six Hundred and Seventy-Six Thousand Dollars ($676,000)) 
(the "Advertising Use Fee")." A schedule of the Advertising 
Use Fee payments over the term of the Agreement is 
included in Attachment I. Remaining advertising revenues 
shall be used for 49ers profit and to reimburse the 49ers for 
BOARD OF SUPERVISORS 
BUDGET ANALYST 
2 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



certain expenses and for funding of a Capital Repairs 
Account as described further below. 

The proposed Agreement authorizes the 49ers to set the 
rates and charges for sale of scoreboards and signage 
advertising. According to the Agreement "the 49ers shall, 
at its own cost and expense... throughout the Term [of the 
Agreement] perform the routine operation, maintenance 
and repair activities to and for the Scoreboards and 
Signage." The proposed Agreement also states: 

The 49ers shall be entitled to retain from annual 
Gross Scoreboards and Signage Revenues the 
following actual costs incurred by the 49ers in 
connection with the Scoreboards and Signage, to the 
extent such costs are reasonable and have been 
actually incurred by the 49ers (the "Operating 
Costs"): (a) the 49ers' actual costs of performing the 
Routine Operation and Maintenance, provided, 
however, that to the extent such costs exceed Three 
Hundred and Forty Thousand Dollars ($340,000) in 
any year, they must be approved in advance by the 
General Manager to be included in Operating Costs 
..., provided that the foregoing Three Hundred and 
Forty Thousand Dollars ($340,000) spending cap 
shall ino jase at a rate of four percent (4%) annually 
during the Term (e.g., the cap will be three Hundred 
and Fifty-Three Thousand, Six Hundred Dollars 
($353,600) in 2003-04; Three Hundred and Sixty- 
Seven thousand, Seven Hundred and Forty-Four 
Dollars ($367,744) in 2004-05 and so on); (b) the 
actual costs of suites and tickets provided to 
advertisers in connection with the sale of advertising 
on or related to the Scoreboards and Signage, up to 
an amount equal to fifteen percent (15%) of annual 
Gross Scoreboards and Signage Revenues in the year 
in which the suites and tickets costs were incurred; 
and (c) the actual costs of certain miscellaneous 
marketing costs directly related to the generation of 
Gross Scoreboards and Signage Revenues, including 
internal sales commission, up to an amount equal to 
twelve percent (12%) of annual Gross Scoreboards 
and Signage Revenues in the year in which the 
miscellaneous costs were incurred. Any costs in 
BOARD OF SUPERVISORS 
BUDGET ANALYST 
3 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



excess of the limits set forth in subsection (b) and (c) 
hereof must be excluded from the Operating Costs 
unless the General Manager approves such costs, 
which approval shall not be unreasonably withheld, 
conditioned or delayed. 

The Budget Analyst notes that the proposed Agreement 
provides no dollar limit on the amount the 49ers can deduct 
for suites and tickets provided to advertising sponsors, but 
rather provides that the 49ers may deduct actual costs, up 
to 15 percent of gross advertising revenues, for these costs. 
In addition, the RPD General Manager may approve 
additional deductions, above the 15 percent of gross 
advertising revenues, for suites and tickets provided to 
advertising sponsors. 

The previous agreement for scoreboard and signage 
advertising which was in effect from May 1, 2001 to 
January 31, 2002, stated: 

49ers shall be entitled to retain gross revenues from 
the sale of advertising on or related to the 
Scoreboards and Signage, including video 
advertising, in the amount of One Million And Two 
Hundred Thousand Dollars ($1,200,000) ...To the 
extent that gross advertising revenues on or related 
to the Scoreboards or Signage, including video 
advertising, exceed One Million And Two Hundred 
Thousand Dollars ($1,200,000) ("Excess Revenues"), 
such Excess Revenues shall be distributed as follows: 
First, to pay the amount by which the actual and 
reasonable costs of the Capital repairs exceed Three 
Hundred and Twenty-Two Thousand Dollars 
($322,000); then to pay 49ers an administrative fee of 
Fifty-Four Thousand Dollars ($54,000); and then, 
any additional Excess Revenues shall be split evenly 
by the City and 49ers, with any such amounts 
determined at the end of the Term and City's share 
due within thirty (30) days thereafter. 

In addition, the proposed Agreement provides that the 
49ers would receive 15 percent profit on the gross revenues 
realized from scoreboard and signage advertising up to 
$1,500,000; 18 percent profit on gross advertising revenues 
BOARD OF SUPERVISORS 
BUDGET ANALYST 
4 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



from $1,500,000 to $2,000,000; and 20 percent profit on 
gross advertising revenues exceeding $2,000,000. 
Therefore, RPD has projected that the total estimated profit 
to the 49ers from the gross scoreboards and signage 
revenues ranges from $180,000 (based on gross advertising 
revenues of $1,200,000) to $915,000 (based on gross 
advertising revenues of $5,000,000). However, as discussed 
in Comment No. 5, below, the RPD has projected gross 
advertising of $3,000,000, which would result in estimated 
profits of $515,000 for the 49ers. 

The proposed Agreement provides that, "All revenues 
remaining after payment of the 49ers' Operating Costs and 
commissions and the City's Advertising Use Fee, ...shall be 
deposited by the 49ers into a separate interest-bearing 
account held jointly by City and the 49ers (the "Capital 
Repairs Account") and may be used by (or, as the case may 
be, reimbursed to) the 49ers only for capital repairs at the 
Stadium mutually agreed upon by the General Manager 
and the 49ers ..." This means that after the 49ers have 
received profits, been reimbursed for allowed costs and paid 
the City the $625,000 advertising use fee (in year 1), the 
49ers shall deposit any revenues remaining to the Capital 
Repairs Account. As stated previously, the advertising use 
fee shall increase at a rate of four percent per year. 
Therefore, if gross revenues and allowable costs remain 
constant, the combined benefit to the City of the 
advertising use fee and capital repairs will also remain 
constant. 

The proposed Agreement also provides that prior to July 1, 
2003, if the Capital Repairs Account exceeds $750,000, the 
City may redistribute any monies exceeding $750,000 to 
RPD, "as if such Excess Monies were part of the 
Department's regular budget." The Budget Analyst notes, 
however, that it is extremely unlikely that the capital 
repairs account will accumulate a balance in excess of 
$750,000 prior to July 1, 2003 because, as discussed in 
Comment No. 5 below, the RPD estimates the proposed 
agreement will result in only $710,000 in revenues 
designated for stadium repairs. After July 1, 2003, the City 
and the 49ers must mutually agree to redistribute any 
monies exceeding $750,000 to RPD and only in the event 
that RPD's fiscal circumstances are substantially similar to 
BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



those in FY 2002-03. According to Ms. Jaci Fong of the 
RPD, "the intent of this contract is to generate as much 
funds as possible to perform needed capital improvements 
to the stadium." However, Ms. Fong reports that this 
provision would provide the RPD with the flexibility to 
designate such funds exceeding $750,000 in the capital 
repairs account to other RPD operating expenditures. 

However, the Budget Analyst notes that the proposed 
Agreement also states that in any year the "City receives 
an increase in such ticket revenues over the City's share of 
ticket revenues for the 2002-03 football season, the 
Advertising Use Fee shall be reduced in an equal amount 
on a dollar-for-dollar basis, with the amount of any such 
reduction added to the Capital Repairs Account..." This 
means that in any future year the City receives increased 
admission ticket sales revenues 1 from the ticket sales 
revenues received in FY 2002-03, the City would receive a 
corresponding reduction in the subject annual advertising 
use fee. 

Ms. Fong reports that this provision was included in the 
Agreement because, "the intent of the parties has been to 
generate as much revenue as possible for much needed 
capital repairs and maintenance to the Stadium that the 
City would otherwise be required to perform under the 
lease." Under the proposed Agreement, any reduction in 
the annual advertising use fee would be deposited in the 
capital repairs account. Under current provisions of the 
Lease for the Stadium, the City receives 10 percent of gross 
revenues from ticket sales as a portion of the rent for the 
Stadium. Ms. Fong reports that the City received 
$3,203,488 in admission ticket sales revenue in FY 2000-01 
and $3,210,757 in admission ticket sales revenue in FY 
2001-02. Ms. Fong further reports that the City received 
an additional $1,232,000 in FY 2000-01 from the 49ers for 
luxury box, parking, food and beverage revenues 2 , for total 
FY 2000-01 rent of $4,435,488 and an additional $1,267,000 



1 Under the original Stadium Lease Agreement between the City and the 49ers, the City receives 10 
percent of the 49ers admission ticket sales revenues as a portion of the Stadium rent. 

2 Under the original Stadium Lease Agreement between the City and the 49ers, the City receives 10 
percent of the 49ers luxury boxes, parking, food and beverage revenues as a portion of the Stadium 
rent. 

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BUDGET ANALYST 

6 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



in FY 2001-02 from the 49ers for luxury box, parking, food 
and beverage revenues, for total FY 2001-02 rent of 
$4,477,757. Ticket prices for 49ers games have increased 
for the 2002 football season from a price of $50 per ticket to 
$58 per ticket, an increase of 16 percent. Therefore, the 
City's revenues from admission ticket sales should likewise 
increase by 16 percent from approximately $3,200,000 to 
$3,712,000 beginning in FY 2002-03. These increased 
revenues have been appropriated in the RPD's FY 2002- 
2003 budget. 

Also, under the proposed Agreement, the City may accept 
capital repairs to the Stadium of equal value in lieu of all or 
any portion of the advertising use fee. Under this provision, 
the RPD General Manager would solely decide whether to 
accept either the advertising use fee or capital repairs 
without any approval of the Recreation and Park 
Commission or the Board of Supervisors. The RPD General 
Manager would also designate which repairs would be 
performed and the 49ers and City would mutually agree on 
the cost of the repairs designated by the General Manager. 

Under the proposed Agreement, in FY 2002-03 the 49ers 
are entitled to a One-Time Reimbursement of $35,125 for 
previously incurred scoreboard and signage operation and 
maintenance costs, provided that the 49ers have paid in full 
all amounts due to the City under the Stadium Lease for 
luxury suite payments. Therefore, the 49ers will receive a 
One-Time Reimbursement of $35,125 for those costs 
previously incurred by the 49ers for scoreboard and signage 
operation and maintenance in FY 2001-02. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

7 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

Naming Rights 



Under the proposed Agreement, the City would grant to the 
49ers the right to select a sponsor to affix their name or 
logo to the Stadium. The 49ers would be authorized to 
enter into an agreement with a sponsor for Stadium 
naming rights on whatever terms the 49ers chose, although 
such agreement must adhere to City policies regarding 
advertising on City property, such as the City's policy that 
there shall be no advertising of cigarettes or tobacco 
products on City property. The actual selection of the 
sponsor would be subject to Recreation and Park 
Commission approval, but would not be subject to approval 
of the Board of Supervisors (see Comment No. 7). 

The proposed Agreement provides that the 49ers will pay to 
the City 50 percent of all naming rights revenues. 
However, no amount for the naming rights revenues has 
been included in the agreement. Further, the 49ers would 
be authorized to deduct from gross Naming Rights 
revenues, prior to calculation of the City's 50 percent 
payment, the actual costs, "to the extent such costs are 
reasonable and have been actually incurred by the 49ers," 
of the following: (a) suites and tickets provided to the 
sponsor; (b) producing and installing naming rights 
signage; (c) Super Bowl tickets provided to the sponsor; (d) 
maintenance of the naming rights signage, and (e) travel by 
the 49ers to secure the Naming Rights Sponsor. However, 
the Agreement provides for no limitations on such 
deductions and does not define "reasonable" with respect to 
such costs. The City may accept capital repairs to the 
Stadium of equal value in lieu of all or any portion of the 
naming rights use fee. Under this provision, the RPD 
General Manager would solely designate which repairs 
would be performed and the 49ers and City would mutually 
agree on the cost of the repairs designated by the General 
Manager. The proposed Agreement states that "Each year, 
the 49ers shall be entitled to all revenues generated from 
the sale of Naming Rights to the Stadium remaining after 
payment of the 49ers' Allowable Expenses and the City's 
Naming Rights Use Fee." 

According to the proposed Agreement, the 49ers would be 
responsible for payment of any taxes resulting from the 
BOARD OF SUPERVISORS 
BUDGET ANALYST 

8 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

Agreement, including possessory interest taxes and sales 
taxes. 

Comments: 1. The City had a prior Agreement with the 49ers for 

stadium naming rights for the period from February 1, 
1996 through January 31, 2000 (a four year period). Under 
the terms of the prior Agreement, the 49ers paid the City a 
total of $3,900,000 in naming right use fees. All of the 
payments to the City by the 49ers accrued as a 
departmental revenue to the General Fund - Recreation 
and Park Department, Candlestick Park. Ms. Fong reports 
that under the original Naming Rights Agreement the 
payments to the City were designated to "provide a portion 
of the funding necessary to undertake the Stadium 
renovations." However, Ms. Fong states that in the 
January 31, 2000 Extension of the Naming Rights 
Agreement, the 49ers and the City agreed that an 
additional $1,800,000 in payments due under the extension 
did not have to be applied to the stadium and could be used 
for any purpose. According to Ms. Peg Stevenson of the 
Controller's Office, the City has been fully paid the 
$3,900,000 by the 49ers under the original agreement and 
the $1,800,000 under the extension. 

2. RPD has awarded the subject Agreement to the 49ers on 
a sole source basis, as discussed in Attachment II, provided 
by RPD, without first obtaining Board of Supervisors 
approval to conduct such sole source negotiations with the 
49ers. The RPD has therefore put the Board of Supervisors 
in a position to "take it or leave it"; i.e., to either approve 
this proposed agreement or disapprove the agreement, 
which could place the City in a position to earn no 
advertising or naming rights revenue for FY 2002-2003. 

According to RPD, the Department awarded the subject 
contract on a sole source basis rather than submit the 
contract to a competitive bidding process because "the 49ers 
are the sole tenant at the stadium." The attached 
memorandum notes that for the prior two contracts for 
scoreboard and signage advertising with Sony and for 
stadium naming rights with the 49ers, RPD conducted a 
broad, competitive solicitation process for bidders for the 
respective contracts. Ms. Fong reports that when RPD 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

9 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



conducted a competitive solicitation process for naming 
rights in 1996, the only bid came from the 49ers. 

In addition, the Budget Analyst notes that under this 
proposed Agreement between RPD and the 49ers, the 49ers 
would be authorized to designate the company to be 
awarded the naming rights without the use of any 
competitive bidding process. 

In the professional judgement of the Budget Analyst, 
without a • competitive bidding process, the Board of 
Supervisors cannot be assured that the City is receiving the 
greatest possible benefit from the scoreboard and signage 
advertising rights and naming rights Agreement. 
Furthermore, since under this proposed Agreement the 
49ers will make profits from the advertising and naming 
rights and provide a portion of the revenue to the City and 
to the Capital Repairs Account, the Budget Analyst believes 
the it is highly likely that City could receive greater 
revenues to the General Fund and for capital repairs to the 
Stadium by putting the rights out to bid. Lastly, the RPD 
could conduct separate competitive selection processes for 
the scoreboard and signage advertising rights and for the 
naming rights, in order to ensure a broader range of 
responses and attainment of the greatest possible economic 
benefit to the City. 

3. Ms. Elizabeth Goldstein, General Manager of RPD, 
reports that the Department contracted with Millsport to 
review the proposed Agreement between the RPD and the 
49ers. The Millsport website states that "Millsport is a 
global sponsorship consultancy bringing brands and people 
together through a wide variety of professional, sporting, 
entertainment, and social events." Ms. Goldstein states 
that Millsport has verbally advised RPD that the City has 
"done very well" in the subject Agreement. The Budget 
Analyst had been previously advised that a written report 
from Millsport would not be available as of the writing of 
this report. However, a report from Millsport was 
transmitted to the Budget Analyst on the afternoon of this 
report's issuance. The Budget Analyst has therefore not 
had sufficient time to review the Millsport report or to 
examine and verify its underlying data, and therefore has 
no comment on its validity. However, the Budget Analyst 
BOARD OF SUPERVISORS 
BUDGET ANALYST 
10 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



notes that no one including Millsport can know the outcome 
of a competitive bid process. Further, the Budget Analyst 
notes that Millsport, based on information provided on its 
website, lists no public sector clients, other than "San 
Francisco City Services" and includes among its private 
sector clients the National Football League (NFL) and NBC 
Sports. The Millsport report is included as Attachment III 
to this report. 

In the professional judgement of the Budget Analyst, 
neither Millsport nor the RPD can determine that the City 
is maximizing its economic benefit until a competitive 
bidding process has been completed. 

4. As stated above, the 49ers will select the advertising 
sponsors and advertising copy, subject to the sole approval 
by the RPD General Manager. If the General Manager 
does not approve the advertising sponsor or advertising 
copy, then the 49ers and the RPD General Manager will 
meet-and-confer to resolve the issue. If the issue is not 
resolved through the meet-and-confer process, the 49ers 
will remove the advertising at their own expense. 

5. The original stadium Lease Agreement between the City 
and the 49ers states that: 

The City shall be obligated throughout the term of 
this lease (a) to keep the Stadium (including the 
physical structure thereof and the parking area 
adjacent thereto) in good order and repair, inside and 
out, and all equipment thereof including, but not 
limited to, machinery, pipes, plumbing, wiring, gas 
and electric fittings and all other equipment thereof 
including all permanent and temporary seats and 
seating arrangements and (b) to make such renewals 
and replacements of equipment, including seats and 
seating arrangements, as may be necessary, so that 
at all times the Stadium, and the parking area, and 
all equipment incident thereto shall be in thorough 
good order, condition and repair; provided, however, 
that the City shall not be obligated to keep in good 
order and repair any improvements, betterments or 
additions, or to make any renewals or replacements 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

11 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



of any equipment, made or installed in the Stadium 
by or at the direction, the Lessee. 

Ms. Fong reports that RPD projects gross revenues for 
scoreboard signage and advertising to be $3,000,000 for FY 
2002-03, resulting in total revenue and capital repairs 
funding to the City of $1,335,000. Based on the RPD's 
projection of gross revenues for scoreboard signage and 
advertising of $3,000,000, the RPD has provided the 
following estimates for costs and revenues for FY 2002-03: 

Percent of 
Gross 
49ers Costs Revenue Amount 



Scoreboard Operating Costs 3 
Suites and Tickets 
49ers Misc. Marketing Costs 
49ers Internal Commission as cost 
Total Estimated Costs Paid to 49ers 



$340,000 

15% 450,000 

2% 60,000 

10% 300.000 

$1,150,000 



49ers Profit 

Profit to 49ers on Gross Revenues 

up to $1.5 million 
Profit to 49ers on Gross Revenues 

from $1.5 to $2 million 
Profit to 49ers on Gross Revenues 

from $2 to $2.5 million 
Profit to 49ers on Gross Revenues 

greater than $2.5M 

Total Estimated Profit to 49ers 

Advertising Use Fee payable by 49ers 

to the City 
Capital Repairs to the Stadium 
Total Estimated Benefit to City 

Estimated Total Gross Scoreboard 
and Signage Revenues 



15% 


$225,000 


18% 


90,000 


20% 


100,000 


20% 


100,000 
$515,000 



$625,000 

710,000 
$1,335,000 



$3,000,000 



3 According to RPD, the amount of $340,000 included for Scoreboard Operating Costs, which is the spending cap 

for such costs without prior approval of the RPD General Manager, is an estimate and is for illustrative purposes 

only. Under the proposed Agreement, the 49ers would be reimbursed for actual scoreboard operating costs. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

12 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



Therefore, using the RPD's estimate of total advertising 
revenues of $3,000,000 annually, the 49ers would receive 
reimbursement and allowances for costs of $1,150,000 and 
profit of $515,000 17.2 percent for a total of $1,665,000. The 
City would receive $625,000 for the advertising use fee and 
$710,000 for the Capital Repairs. 

However, in response to an inquiry from the Budget 
Analyst, Mr. Ed Goines, Vice President of Business 
Affairs/Legal Counsel for the 49ers stated that total 
advertising revenues for 2001 was $1,097,000. Additionally, 
Mr. Alex Tourk, Director of Governmental Affairs for the 
49ers informed the Budget Analyst that the 49ers spent 
$170,000 for scoreboard operating costs in 2001. Therefore, 
based on this information, the Budget Analyst concludes 
that it is highly unlikely that the $3,000,000 total 
advertising revenue figure estimated by the RPD will be 
achieved in the early years of the proposed agreement. 
With respect to future years under this proposed 
agreement, Mr. Goines stated that "It is impossible, at this 
time to accurately project gross [advertising] revenue." 
According to Mr. Goines "...the 49ers internal modeling 
includes annual gross sales levels as low as $1,400,000 to as 
high as $3,000,000". 

6. Ms. Fong states that RPD is unable to provide the 
Budget Analyst with any projections for Naming Rights 
revenues because RPD "does not want to adversely effect 
ongoing negotiations between the 49ers and potential 
sponsors." 

The 49ers have also declined to provide the Budget Analyst 
with estimated Naming Rights revenues to be received by 
either the City or the 49ers. As previously noted, the 
proposed agreement is silent as to the amount of naming 
rights revenues to be realized. 

7. The proposed ordinance provides that the 49ers would 
have the exclusive right to select a Naming Rights sponsor 
for the stadium naming rights, subject to City and 
Recreation and Park Commission policies on advertising on 
City and Recreation and Park Department properties and 
subject to prior approval of the Recreation and Park 
Commission of the proposed Stadium name and any 

BOARD OF SUPERVISORS 
BUDGET ANALYST 
13 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



subsequent Stadium name, if the sponsor were to change. 
However, the selection of the Naming Rights sponsor would 
not be subject to Board of Supervisors approval. The 
Budget Analyst recommends that the proposed agreement 
be amended to require that the selection of the sponsor of 
naming rights be subject to Board of Supervisors approval. 

8. Under the proposed ordinance, the City would not be 
required to pay the costs of replacing highway or street 
signs identifying the stadium but would be required to use 
its best efforts to cause CalTrans or other appropriate 
governmental authority to replace freeway and street signs. 
The proposed Agreement states: 

Should the 49ers request that CalTrans or the City 
replaces freeway or street signage identifying the 
Stadium, it shall be replaced at no expense to the 
City. City shall use its best efforts, including without 
limitation acting as applicant or co-applicant, to 
cause CalTrans or other appropriate governmental 
authority to replace freeway and street signs, at no 
cost to City, as promptly as possible following public 
announcement of the Naming Rights Sponsor. 

9. The proposed Agreement would become effective upon 
approval by the Board of Supervisors and the Mayor and 
would continue until the expiration of the stadium lease on 
May 31, 2008. Under the current stadium Lease, the 49ers 
may exercise three successive five year renewal options. If 
the 49ers exercise their options to renew the stadium lease, 
then the subject Agreement for advertising and naming 
rights would also be extended for the same period of time as 
the Stadium Lease without further Board of Supervisors 
approval. 

10. If the 49ers elect to terminate their stadium tenancy 
prior to the expiration of the stadium lease on Maj r 31, 
2008, without prior written consent of the City and for any 
reason other than to move to another location within the 
City, the proposed Agreement states that the 49ers shall 
pay the City an early termination penalty equal to a 
percentage of the naming rights use fee, depending on the 
number of years remaining in the stadium lease as follows: 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

14 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



With six years remaining on the Lease, the 49ers 
shall pay 100 percent of the equivalent of the City's 
Naming Rights Use Fee for one year. With five years 
remaining on the Lease, the 49ers shall pay 83.3 
percent of the equivalent of the City's Naming Rights 
Use Fee for one year. With four years remaining on 
the Lease, the 49ers shall pay 66.6 percent of the 
equivalent of the City's Naming Rights Use Fee for 
one year. With three years remaining on the Lease, 
the 49ers shall pay 50 percent of the equivalent of 
the City's Naming Rights Use Fee for one year. With 
two years remaining on the Lease, the 49ers shall 
pay 33.3 percent of the equivalent of the City's 
Naming Rights Use Fee for one year. With one year 
remaining on the Lease, the 49ers shall pay 16.6 
percent of the equivalent of the City's Naming Rights 
Use Fee for one year. 

11. As stated previously, the proposed agreement provides 
that the 49ers can expend 15 percent of gross advertising 
revenue for luxury suites and tickets provided to 
advertisers in connection with the sale of advertising on or 
related to the scoreboards and signage beyond the 
percentage of gross revenues. The RPD estimates that such 
costs would range from $180,000 to $750,000. As of the 
writing of this report, Mr. Tourk of the 49ers is unable to 
provide the Budget Analyst with data on the actual 
expenses of this nature which the 49ers have incurred 
during 2001. 

The proposed Agreement also provides that the 49ers would 
be authorized to deduct from gross Naming Rights revenues 
the actual costs, "to the extent such costs are reasonable 
and have been actually incurred by the 49ers," of the 
following: (a) suites and tickets provided to the sponsor; (b) 
producing and installing naming rights signage; (c) Super 
Bowl tickets provided to the sponsor; (d) maintenance of the 
naming rights signage, and (e) travel by the 49ers to secure 
the Naming Rights Sponsor. The proposed agreement does 
not define the term "reasonable" for purposes of evaluating 
such costs and does not identify how such an evaluation can 
be determined or who will determine reasonableness. The 
Budget Analyst recommends that the proposed agreement 
be amended to delete the provisions authorizing the 49ers 
BOARD OF SUPERVISORS 
BUDGET ANALYST 
15 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



to deduct the costs of luxury suites and tickets provided to 
advertisers and the Naming Rights Sponsor from gross 
revenues, and to delete the deduction for the cost of Super 
Bowl tickets provided to the Naming Rights Sponsor. The 
Budget Analyst further recommends that the proposed 
agreement be amended to clearly specify how any 49ers 
costs to be deducted from total naming rights revenue will 
be evaluated for reasonableness. 

12. The proposed Agreement states: 

Upon expiration or earlier termination of this 
Agreement, any and all funds, credit, interest or 
other balance remaining in the Capital Repairs 
Account shall first be used to reimburse the 49ers for 
any unreimbursed actual costs of Capital Repairs 
which the 49ers performed prior to the accumulation 
of sufficient funds in the Capital Repairs 
Account... All funds remaining after any such 
reimbursement shall be divided with seventy-five 
(75%) to the City and twenty-five percent (25%) to 
the 49ers. 

According to RPD, although the 49ers would have received 
full reimbursement for their actual capital repairs costs, 
the proposed Agreement would grant 25 percent of the 
unexpended capital repairs account balance to the 49ers in 
order to provide an incentive to the 49ers to not request 
unnecessary repairs. However, because such repairs can 
only be made if the costs are specifically approved by the 
RPD General Manager, the Budget Analyst questions this 
provision. The Budget Analyst recommends that the 
Agreement be amended to remove the provision that the 
49ers receive 25 percent of any unexpended balance in the 
capital repairs account. 

13. As stated previously, the proposed Agreement provides 
that, if the City receives increased admission ticket sales 
revenues after FY 2002-03, based on 10 percent of the 49ers 
total admission ticket sales under the Stadium Lease, the 
City would receive a corresponding, dollar-for-dollar 
reduction in the subject annual advertising use fee. The 
Budget Analyst questions why the City's advertising use 
fee should be reduced if the City's admission ticket sales 

BOARD OF SUPERVISORS 
BUDGET ANALYST 
16 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



revenues increase. The Budget Analyst recommends that 
the Agreement be amended to remove the reduction in the 
annual advertising use fee if admission ticket sales revenue 
increase because the City will receive reduced revenues 
from the proposed Agreement under this provision, if 
admission ticket sales revenues increase substantially. 

14. According to Ms. Amy Brown of the City Attorney's 
Office, typically, an agreement such as the subject 
Agreement with the 49ers would be introduced as a 
resolution. However, the subject Agreement for the 
Stadium advertising and naming rights is being submitted 
for approval to the Board of Supervisors as an ordinance. 
In response to questions of the Budget Analyst, Ms. Brown 
states that "while we believe that there may be a number of 
independent legal justifications for not competitively 
bidding the agreement with the 49ers (in addition to the 
business-related justifications provided by the 
Department), we felt that the most legally protective way to 
have the agreement approved was by an ordinance waiving 
any potentially applicable contrary sections of the 
Administrative Code. Thus, we advised the Department 
that the agreement should be approved by an ordinance 
rather than a resolution." The proposed ordinance provides 
that "notwithstanding Chapters 6 [Public Works 
Contracting Policies and Procedures] and 21 [Acquisition of 
Commodities and Services] of the Administrative Code, the 
Board of Supervisors hereby approves the Agreement and 
the transactions contemplated thereby and authorizes the 
Commission, through the General Manager of the 
Recreation and Park Department..., to execute the 
Agreement, in the name and on behalf of the City, in 
substantially the form of such Agreement presented to this 
Board." 

15. The proposed ordinance also provides that "the Board of 
Supervisors authorizes the General Manager to enter into 
any additions, amendments or other modifications to the 
Agreement ... that the General Manager determines are in 
the best interests of the City, do not materially decrease the 
revenue to the City contemplated in the Agreement or 
otherwise materially increase the obligations or liabilities 
of the City, and are necessary or advisable to complete the 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

17 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

transactions contemplated in the Agreement and to 
effectuate the purpose and intent of this ordinance." 

16. The proposed Agreement provides that: "The 49ers 
agree, for the Term of this Agreement and until the end of 
the third (3 rd ) year after the expiration or termination of 
this Agreement, to make their Books and Records 
reasonably available to City, or to any City auditor, or to 
any auditor or representative designated by City ... not 
more than once per calendar year, for the purpose of 
examining said Books and Records ... to determine the 
accuracy of the 49ers' reporting of any Gross Revenues 
hereunder, Operating Costs, Allowable Expenses, Capital 
Repair Account monies, and any other sums related to or 
due under this Agreement." 

Summary: The proposed ordinance would approve the subject 

Agreement for scoreboard and signage advertising rights 
and naming rights for the Stadium located at Candlestick 
Point to the 49ers on a sole source basis. The RPD has 
therefore put the Board of Supervisors in a position to "take 
it or leave it"; i.e., to either approve this proposed 
agreement or disapprove the agreement, which could place 
the City in a position to earn no advertising or naming 
rights revenue for FY 2002-2003. Under the proposed 
Agreement, the 49ers would have the exclusive right to sell 
3 r ear-round advertising on or related to Stadium 
scoreboards and signage. Based on the RPD's projections of 
Gross Advertising Revenues of $3,000,000 for FY 2002-03, 
the 49ers would receive an estimated $1,150,000 in 
reimbursed costs, and $515,000 in profit, an estimated 
$710,000 would be deposited to a Capital Repairs Account 
for capital repairs to be performed on the Stadium, and the 
City would receive $625,000 for the advertising use fee. 
However, based on the fact that total advertising revenue of 
$1,097,000 was realized in 2001 according to the 49ers, the 
Budget Analyst concludes that it is highly unlikely that the 
$3,000,000 advertising revenue estimate will ever be 
achieved. 

Under the proposed Agreement, the 49ers would also be 
authorized to select a sponsor for Stadium Naming Rights 
on whatever terms they chose, without a competitive 
bidding process. The proposed Agreement provides that the 
BOARD OF SUPERVISORS 
BUDGET ANALYST 
18 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

49ers will pay to the City 50 percent of all Naming Rights 
revenues after the deduction from gross revenues of certain 
maintenance and marketing costs. The RPD and the 49ers 
have declined to provide the Budget Analyst with any 
projections for Naming Rights revenues and no amount of 
such revenues is specified in this proposed agreement. The 
selection of a Naming Rights sponsor would be subject to 
approval by the Recreation and Park Commission without 
approval by the Board of Supervisors. 

In the professional judgement of the Budget Analyst, 
without a competitive bidding process, the Board of 
Supervisors cannot be assured that the City is receiving the 
greatest possible benefit from proposed Agreement. 
Furthermore, since under this proposed Agreement the 
49ers will make profits from the advertising and naming 
rights and provide a portion of the revenue to the City and 
to the Capital Repairs Account, the Budget Analyst believes 
the City could receive greater revenues to the General Fund 
and for capital repairs to the Stadium by putting the rights 
out to bid. Lastly, the RPD should conduct separate 
competitive selection processes for the scoreboard and 
signage advertising rights and for the naming rights, in 
order to ensure a broader range of responses and 
attainment of the greatest possible economic benefit to the 
City. 

Recommendations: 1. Because, under this proposed agreement, the scoreboard 
and signage advertising rights and naming rights would be 
awarded to the 49ers without a competitive bidding process 
and because no guaranteed naming rights revenues or 
estimates of naming rights revenues payable to the City 
and to the 49ers are available at this time, and no such 
revenues are specified in the agreement, there is no 
assurance that the City is receiving the greatest possible 
economic benefit from the proposed Agreement. Further, 
the RPD has put the Board of Supervisors in a position to 
either approve this proposed agreement or disapprove the 
agreement, which could place the City in a position to earn 
no advertising or naming rights revenue for FY 2002-2003. 

Based on the provisions of the propose agreement, the 
Budget Analyst cannot recommend approval of the 
proposed ordinance. 
BOARD OF SUPERVISORS 
BUDGET ANALYST 
19 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



2. If the Board of Supervisors decides to approve the 
proposed ordinance, the Budget Analyst recommends 
making such approval contingent on the following 
amendments to the proposed Agreement and the ordinance: 

a. Amend the proposed agreement to require that the 
agreement between the 49ers and the sponsor of 
Naming Rights be subject to Board of Supervisors 
approval instead of approval by only the Recreation and 
Park Commission. 

b. Amend the proposed agreement to delete the 
provisions authorizing the 49ers to deduct the costs of 
49ers luxury suites and other game tickets provided to 
advertisers and the Naming Rights Sponsor from gross 
revenues used to calculate revenues to the City and to 
delete the deduction for the cost of Super Bowl tickets 
provided to the Naming Rights Sponsor from gross 
Naming Rights revenues used to calculate revenues to 
the City. 

c. Amend the proposed agreement to define 
"reasonable" costs with respect to all costs that will be 
reimbursed to the 49ers and clearly specify how such 
costs will be evaluated and by whom. 

d. Amend the proposed agreement to remove the 
provision that the 49ers receive 25 percent of any 
unexpended balance in the Capital Repairs Account 
because there is no need to provide an incentive to the 
49ers to not request unnecessary repairs since such 
repairs can only be made if the costs are specifically 
approved by the RPD General Manager. 

e. Amend the proposed agreement to remove any 
reduction by the 49ers to the annual advertising use fee 
payable to the City if admission ticket sales revenues 
increase. 

f. Amend the proposed agreement to remove the 
provision that the RPD General Manager would solely 
decide whether to accept either the advertising use fee 
or capital repairs without any approval of the 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

20 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



Recreation and Park Commission or the Board of 
Supervisors. 

g. Amend the proposed agreement to delete the 
provision that if the 49ers exercise their options to 
renew the stadium lease, the Agreement for advertising 
and naming rights would also be extended for the same 
period of time as the Stadium Lease without further 
Board of Supervisors approval. 

h. Amend the proposed ordinance to delete the 
provision that "the Board of Supervisors authorizes the 
General Manager to enter into any additions, 
amendments or other modifications to the Agreement ... 
that the General Manager determines are in the best 
interests of the City, do not materially decrease the 
revenue to the City contemplated in the Agreement or 
otherwise materially increase the obligations or 
liabilities of the City, and are necessary or advisable to 
complete the transactions contemplated in the 
Agreement and to effectuate the purpose and intent of 
this ordinance." The Budget Analyst is particularly 
concerned about the definition of "material" decreases in 
revenue and "material" increases in obhgations and 
liabilities of the City. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

21 



City and County of San Francisco 




Recreation and Park Department 

Attachment I 
Page 1 of 3 



MEMORANDUM 



DATE: 


July 23, 2002 


TO: 


Ken Bruce 
Severin Campbell 
Sarah Graham 


FROM: 


Jaci Fong 


CC: 


Elizabeth Goldstein 
Michael Frank 
Michael Cohen 
Amy Brown 



RE: 



Agreement for Stadium Advertising and Naming Rights Between City 
and County of San Francisco (the "City") and San Francisco Forty 
Niners, LTD (the "49ers"). 



This memorandum responds to questions from your office, about the proposed Advertising 
and Naming Rights Agreement with the 49ers. It is very difficult to compare the proposed 
agreement with the previous advertising and naming rights agreements, because the 
circumstances are very different, the agreements are different in both intent and structure, and 
most significantly, the economics are completely different. During the term of the prior 
agreements, there were two sports teams at the Stadium, the 49ers and the San Francisco 
Giants. Through their presence at the Stadium, the primary tenant at the Stadium, the Giants, 
increased the advertising and naming rights values through increased exposure, as well 
economies of scale and costs associated with the agreements. The Giants moved to Pac Bell 
Park prior to the 2000 baseball season. 

Prior Advertising and Signage Agreements 

The agreement with Sony was effective March 1, 1987 and expired on March 31, 2001. The 
previous agreement with Sony was created with the intent of generating enough revenue 
through signage and advertising to: 1) offset the amortized cost of the scoreboard, equipment 
and signage, 2) offset costs of obtaining advertisers, including sales commissions, 3) offset the 
cost of operating the scoreboard and 4) generate additional revenue for the City. 

Before 2001 the 49ers received no revenues from Stadium Advertising. As an interim 
measure, last year we entered into a one-year Scoreboard Advertising Agreement with 49ers. 



McLaren Lodge, Golden Gate Park 

501 Stanyan Street 

San Francisco, CA 94117-1898 



FAX: (415)831-2099 
Phone:(415)831-2700 



22 



Attachment I 
Page 2 of 3 

Gross revenues totaled 51,097,000. The intent was to generate sufficient revenue to: 1) offset 
the cost of critical safety related capital repairs to the "wedge" section and signage "ribbon" of 
the Stadium, before the start of the 2001-2002 football season, that the City would have 
otherwise been responsible for, 2) offset the cost of operating the scoreboard, 3) offset costs 
of obtaining advertisers, including sales commissions, and 4) generate additional revenue for 
the Department. This was achieved. During the process of negotiating the one-year 
agreement the City and the 49ers obtained bids, reviewed historic costs, and had lengthy 
discussions regarding the value of the economic components of the agreement. 

"The Agreement Between City and County of San Francisco and San Francisco 49ers for the 
Use Operation and Maintenance of the Scoreboards and Signage at 3Com Park" dated May 1, 
2001, required the 49ers to pay a base Use Fee of SI 10,000 and perform capital repairs valued 
at $322,000. In addition, the 49ers operated the Scoreboard (which would otherwise be the 
City's responsibility), at a cost of approximately 5170,000. Total economic benefits received 
by the City were $602,000. Section 6. 3.2. provided a means for calculating the "split" of 
revenues in excess of 51,200,000; however, gross revenues were only 51,097,000 and never 
exceeded SI, 200,000. The remaining S495,000 included the 49ers costs and profits. These 
amounts have not yet been audited 

Proposed Agreement - Advertising and Sig na ge Component 

Projected revenue to the 49ers from signage and advertising in the proposed agreement, is cost 
reimbursements of 51,150,000 per year (please note this is a conservative estimate, this 
number may be much lower, as the 49ers are limited to the reimbursement of actual costs), 
and net revenue/profit of S5 1 5,000 per year. 

Projected Benefits to City from Scoreboard and Signage: 



Year 


Season 


Use Fee 


In Improvements 


Total 


1 


2002-2003 


5625,000 


5710,000 


51,335,000 


2 


2003-2004 


650,000 


685,000 


1,335,000 


3 


2004-2005 


676,000 


659,000 


1,335,000 


4 


2005-2006 


703,040 


631,960 


1,335,000 


5 


2006-2007 


731,161 


603,839 


1,335,000 


6 


2007-2008 


760,408 


574,592 


1,335,000 


Prior IN 


r aming Rights 


Agreement 







The intent of the original Naming Rights Agreement was to "provide a portion of the funding 
necessary to undertake the [Stadium] renovations." Under the initial term of the agreement the 
City received payments totaling 52,900,000. Under the extension options, the City received 
payments totaling 51,800,000. These payments did not depend on actual revenues generated 
by the 49ers. Rather the City received a flat fee as specified in the "Agreement to Sell 
Stadium Naming Rights 1996-2000", Article IV. Term and Article V. Fees and Charges. 

As previously stated in my memo to you dated July 1 2, 2002, except as set forth below, the 
49ers in good faith have made all these payments. A final 51,000,000 payment by 49ers is 
outstanding under Article V. of the Naming Rights Agreement. The City and 49ers have 
discussed the possible application of such sum for pre-developmcnt expenses for the new 
stadium approved by the San Francisco voters, consistent with Board of Supervisors 



Attachment I 
Page 3 of 3 

Ordinance No. 226-96. Such Ordinance authorized sequestration of proceeds from the 
Naming Rights Agreement for the purpose of planning and development of a new stadium or 
for renovation of the existing Stadium. Nothing in the Agreement is intended to waive or 
otherwise affect City's rights or 49ers' obligations with respect to such payment in the event 
the parties fail to timely reach agreement regarding the use of such monies, or in the event any 
such agreement does not receive required City approvals. Any such agreement to pay or 
reimburse for predevelopment expenses incurred by 49ers is subject to approval by the 
recreation and Park Commission, the Board of Supervisors and the Mayor. The City approved 
the deferral of the resolution of this issue with the approval of the "Agreement Regarding 
Extension of Naming rights Agreement", dated January 31, 2000. 

The previous Naming Rights Agreement generated gross revenues as detailed below: 



Year 


Gross Revenue (In Minions of $'s) 


2001 


2.10 


2000 


2.10 


1999 


2.25 


1998 


1.30 


1997 


2.25 


1996 


2.25 



These figures are gross amounts, which were provided by a representative of the 49ers. I 
cannot estimate the net amounts received by the 49ers, because payments to the City under the 
original Naming Agreement were for specified amounts rather than calculated based on actual 
revenues, and as a result, the 49ers were not required to disclose information about operating 
and other costs, the 49ers are required to make full disclosure under the proposed agreement. 

Proposed Agreement - Naming Ri ghts Component 

The 49ers and the City will each receive 50% of net revenues from naming rights. Again, we 
hesitate to provide projections for the naming rights as we do not want to adversely effect 
ongoing negotiations between the 49ers and potential sponsors, which would ultimately result 
in less economic benefits to the City. 

Conclusion 

It was our intention with the proposed agreement to create a "unity of interest", which would 
motivate both parties to increase revenues and decrease costs in order to maximize net 
revenues, and fund the much needed capital repairs at the Stadium, that the City might 
otherwise be required to perform. Unlike the previous agreements, because the 49ers are 
reimbursed based on actual costs, and revenues are shared on a "net" basis, the agreement 
requires full disclosure of gross revenues and costs associated with the agreements. Of the 
total revenue that will be received by the City, $1,140,000 of projected Stadium scoreboard 
advertising and naming rights revenue was included as revenue in our operating budget for the 
Stadium. It is the intention of the Department that any additional revenue due the City from 
advertising and signage or naming rights, is directed towards the much needed capital repairs 
and maintenance of the Stadium. 



24 



City and County of San Francisco 




Recreation and Park Department 

Attachment II 
Page 1 of 2 



MEMORANDUM 



DATE: 


July 14, 2002 


TO: 


Ken Bruce 




Severin Campbell 


FROM: 


Jaci Fong 


CC: 


Elizabeth Goldstein 




Michael Frank 




Michael Cohen 




Amy Brown 



RE: 



Agreement for Stadium Advertising and Naming Rights Between City and 
County of San Francisco and San Francisco Forty Niners, LTD. 



In anticipation of the expiration of the City's 1996 Naming Rights Agreement with the San 
Francisco Forty Niners ("49er"), staff had extensive discussions with the City Attorney's 
office regarding the process for developing a new advertising and Naming Rights agreement 
for the stadium located at Candlestick Point and formerly know as 3Com Park ("the 
Stadium"). We have been advised by the City Attorney's office that it is legally permissible to 
enter into a contract directly with the 49ers without seeking other bidders so long as the Board 
of Supervisors approves the agreement by ordinance. 

We believe entering into the agreement directly with the 49ers is in the best interest of the City 
for the following reasons: 

1. Brings Value that only the 49ers can provide 

a. The 49ers are the sole tenant at the Stadium. It is the 49ers' presence and the team's 
stature and identity that gives most of the value to Naming and Advertising Rights at 
the Stadium. The 49ers' wanning record (resulting in television exposure), and the 
consistent sold out attendance record of 49ers games at the Stadium translates to near 
guaranteed advertising exposure. Although the stadium is occasionally permitted for 
other events these are often not committed more than 60 days in advance. Therefore, 
without die 49ers substantial prior commiunents, Naming and Advertising would have 
little or no value to potential naming and advertising sponsors. Conversely, having the 
49ers organization sell die advertising and naming opportunities directly adds cache 



McLaren Lodge, Golden Gate Park 

501 Stanyan Street 

San Francisco, CA 94117-1898 



25 



FAX: (415)831-2099 
Phone:(415)831-2700 



Attachment II 
Page 2 of 2 

and therefore increases the value that can be obtained from the Naming and 
Advertising Rights. 



b. Bundling opportunities. In addition, under the Stadium lease with the City, the 49ers 
have the exclusive right to market luxury boxes and food and beverage during the term 
of the lease. Exclusivity, luxury box rights, product sales opportunities and/or player 
appearances are often demanded by potential sponsors as part of naming rights and 
advertising rights packages. Only the 49ers can fulfill all of these expectations from 
potential sponsors. Again, the ability to bundle advertising with the offer of luxury 
suites or player appearances will increase the value that can be derived from the sale of 
advertising at the Stadium. 

c. The 49ers marketing expertise. The 49ers have the marketing expertise, staff and 
infrastructure in place to sell both Naming and Advertising Rights. Additionally, they 
have contacts with companies that advertise in connection with professional sports that 
are invaluable and that will maximize the value obtained from such advertising at the 
Stadium. 

2. Capital Repairs to the Stadium . Both the City and the 49ers are very interested in 
ensuring that much needed capital repairs are performed to the Stadium. The proposed 
agreement with the 49ers establishes a structure and provides funds for the City and the 
49ers to work collaboratively to make these repairs to the Stadium, that the City is 
otherwise required to perform under the lease. The proposed agreement allows us to 
maximize the funds generated from the Stadium to make these repairs and to have the 
work performed in the most efficient and timely manner. 

3. Previous Contractual Relationship with the 49ers. The 49ers have held the Naming 
Rights to the Stadium since 1995. In 1996, the City attempted to solicit bids from other 
companies that might be interested in purchasing the Naming Rights but only the 49ers 
submitted a proposal. Since that time, the Stadium has lost its only other regular, high 
profile tenant, the Giants, and the naming and stadium advertising market generally has 
experienced a downturn. 

To insure that we have negotiated a "deal" that is favorable to the City and reflects industry 
standard practices, we have hired Millsport a marketing sports consultant to provide guidance 
and an independent evaluation of our efforts. Millsport has confirmed that the contract 
represents the best possible deal for the City. 



26 



Attachment III 
Page 1 ot 4 

Agreement for Stadium Advertising and Naming Rights Between City and County 

of San Francisco and the San Francisco 49ers 

Millsport Evaluation 

July 24, 2002 



Millsport has been retained as an independent consultant by the City of San 
Francisco to evaluate the recent stadium advertising and naming rights agreement 
between the City and the San Francisco 49ers. For the purposes of this analysis, Millsport 
specifically focused on three aspects of the current agreement: 

• The City's share of revenue from the advertising sold 

• The City' s share of revenue from the naming rights sold 
« Sale of advertising and naming rights by 49ers 

Millsport' s evaluation is based on a number of factors including the ongoing 
evolution in the sports industry, comparable deals between cities/municipalities and NFL 
teams in other markets, and the resources of both the City and the 49ers to maximize 
these interests. 

Advertising Revenue 

An overall shift in the business of sports over the past decade or more has 
changed the way lease deals between teams and stadium owners are structured. The 
number of markets interested in attracting and retaining professional sports teams is 
greater than the supply dictated by the leagues. Additionally, escalating costs to run a 
team, primarily from rising player salaries, are making it more difficult for teams to 
compete. 

Historically, stadiums were merely a venue for local teams to play their games. 
Stadium owners received most of the revenue, with a share of tickets, concessions and 
other services going to the team. The economics have changed dramatically, and in 
today's lease agreements it is not uncommon for the team to receive all revenue 
associated with the stadium while bearing few of the costs. 

Of the 3 1 NFL teams (not including the 49ers), 22 teams receive 100% of stadium 
advertising revenue. In eight other deals, the percentage of revenue allocated to the team 
"anges from 10% of permanent signage/100% of game day signage to 75% of all 
advertising going to the club. The following are examples of teams that have negotiated 
favorable terms in the percentage of stadium advertising revenues they receive. 



Ieam 

Green Bay Packers 


% nf Advertising, RevenueJS^tailieji 


• 100% 


Arizona Cardinals 


100% 


Jacksonville Jaguars 


100% 


Oakland Raiders 


100% 


St. Louis Rams 


75% 


Tampa Bay Buccaneers 


100% 


Dallas Cowboys 


100% 


Philadelphia Eagles 


100% 


Denver Broncos 


100% 



Source: Millsport 



27 



Attachment III 
Page 2 of 4 



Given the economics of the latest deals, Millsport believes that the S625 t 000 
annual advertising use fee paid to the City and 100% allocation of all revenue remaining 
after costs and commissions to a capital repairs budget is an equitable and fair allocation. 
To the extent such repairs would be the City's obligation under its, lease with the 49ers, 
these revenues should be counted as City revenues. 

In Millsport's opinion, the costs and commissions outlined in sections E (i) and 
(ii) of the proposed agreement are reasonable. These costs represent actual hard costs 
associated with the sales of advertising and should thus be deducted from the overall 
gross revenue and signage revenues. Routine operation and maintenance are essential in 
keeping the scoreboards and ad panels in "sellable" condition. Additionally, these costs 
are the City's obligation under its lease so it is appropriate to deduct them. 

Tickets and suites provided to advertisers also represent an actual hard cost to the 
team. These types of benefits or "merchandising credits" are included in virtually all 
stadium advertising packages and are expected by the advertiser. To remain competitive, 
the 49ers must continue to incorporate these benefits. 

The miscellaneous costs identified in the contract (e.g. internal sales 
commissions) also represents an actual hard cost incurred by the team to sell advertising, 
and should thus be recouped by the 49ers prior to the revenue sharing. While 
commissions vary by industry, a 10 - 15% range is typical in the sports advertising arena. 

Millsport also believes that the overall commission structure paid to the team 
based on advertising sales is customary and fair. Further, the sliding scale provides an 
added incentive for the team to maximize revenues from advertising sales, benefiting 
both the team and the City. 



Naming Rights 

Following on the heels of rebounding advertising sales, the market for naming 
rights appears to be picking up as well. 

Mega naming rights deals that headlined the business pages during the late 1990's 
screeched to a halt in 2000, as the economy turned sour and several corporate naming 
rights partners filed for bankruptcy. The events of September 1 1 compounded the 
situation with more financial cutbacks, and a direct impact on the number of fans 
attending sporting events. Naming rights deals that had been snatched up for $7 million 
per year or more rapidly returned to their pre-dotcom boom levels. And industry analysts 
readjusted estimated values of various new and renovated stadiums to the S2-3 million 
range. 

Recent deals, however, are hinting that corporate interest in naming rights deals is 
beginning to show signs of life again. In two such deals, inked in June 2002, Minute 
Maid agreed to pay $3.57 million per year for the Houston Astros Stadium and Lincoln 
Financial signed on with the Philadelphia Eagles to name their new stadium for $6.75 
million a year. The most recent NFL naming rights deal prior to the Eagles' was signed 
in January 2002 between Edward Jones and the St. Louis Rams for S2.65 million per 
year. 

Millsport believes that the agreement to share revenue equally in a naming rights 
agreement is consistent or superior to the market and other team agreements, and as the 
market continues to improve, could provide upside potential for the City over its previous 
agreement with the 49ers. 



28 



Attachment 111 
Page !3 of 4 

At least thirteen of the 3 1 NFL teams (not including the 49ers) receive 100% of 
revenue generated from their naming rights deals. The Arizona Cardinals, the Dallas 
Cowboys, the Cleveland Browns, the Tennessee Titans, the Philadelphia Eagles, the 
Pittsburgh Steelers, and the Tampa Bay Buccaneers are among the teams retaining 100% 
of naming rights revenue. 

A minimum of eight others teams receives at least 50%. For example, the Green 
Bay Packers, the Jacksonville Jaguars and the Oakland Raiders share naming rights 
revenues equally with the City. The St. Louis Rams receive 75% of naming rights 
revenues, and the Baltimore Ravens negotiated a one-time payment of S10 million to the 
Maryland Stadium Authority for the rights to sell naming rights and retain revenue. In 
1999, the Ravens sold naming rights to PSINet for SI 05 million over 20 years. 



Direct Negotiations for Sale of Advertising and Naming Rights with 49ers 

In Millsport's opinion, allowing the 49ers to market and sell both advertising 
inventory and naming rights will maximize the revenue shared by the team and the City. 
The 49ers possess a unique combination of brand power, skills/expertise, relationships, 
and resources to attract a desirable naming partner. 

First and foremost, the 49ers brand and associated team benefits represent the 
single most valuable asset in the stadium naming rights package. Locally, the 49ers are 
the Bay Area's most popular team. More than 36% of residents cited the franchise as 
their favorite team, followed by the Giants at 8%. Entering the 2001 season, the 49ers 
had registered 175 consecutive sellouts at home, including 22 postseason games, and fans 
continue to fill the stadium that holds 70,000 fans to capacity year after year. 

Nationally, the team ranks second in the national public's perception as the NFL 
team with the greatest winning tradition and finest overall qualities. And the team's 
success and visibility reach beyond the NFL, ranking in the top ten most successfully 
branded international sports franchises according to a 200 1 Sports Business News study. 
This appeal results in further benefits to a potential naming rights partner including 
extensive national television exposure and publicity. 

With the Giants departure, and with a limited schedule of other events in the 
stadium (beyond 49ers games), entities pursuing a naming rights deal are in reality 
purchasing the rights to associate themselves with the powerful 49ers franchise. Without 
the team, the value and desirability of a stadium naming relationship decreases 
substantially. Because the 49ers control access to the brand, as well as to a number of 
tangible benefits within the stadium, the team is by far in the best position to structure a 
deal that will be most attractive to the naming prospect. 

The 49ers marketing team is exposed, on a daily basis, to the types and values of 
advertising and naming rights partnerships being formed in the professional sports arena. 
The team's access to information in this area, including information that may not publicly 
available, will be invaluable in creating a package that brings in maximum revenues to 
the team and thus, to the City. 

Further, the team's intricate web of relationships across other NFL teams, the 
league, non-NFL franchises, corporate sponsorship departments and other key industry 
leaders puts them in a unique position to network and access potential partners. The 
team's understanding of how companies utilize sponsorship, advertising and naming 



29 



Attachment III 
Page 4 of 4 

rights partnerships to achieve objectives will allow them to customize and tailor win-win 
packages for the City/team and the prospective naming rights partner. 

The team also has the necessary resources to devote to a full-scale search for a 
naming rights partner. The City's Parks and Recreation Department may lack the 
resources and expertise to manage a project of this magnitude and scope. 

Given the team's longevity in the San Francisco marketplace and its desire to 
enhance both current and future profitability and partnerships, the 49ers have a vested 
interest in negotiating the best possible naming rights deal. Ideally, the partner who 
comes on board will continue the naming rights relationship when the 49ers ultimately 
move to a new stadium. 

It should also be noted that in drafting this agreement we believe that the City has 
accounted for key considerations in handing this right/responsibility to the team. 
Specifically, the City has protected its interests in the naming rights deal by incorporating 
key points such as the right to approve any proposed stadium name and the provision to 
include value-in-kind consideration and early termination fees in the event the 49res 
terminate their tenancy at the stadium. 



30 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

Item 4 File 01-1178 

Note: This item was continued by the Finance Committee at its meeting of July 24, 
2002. 



Department: 
Item: 



Description: 



Taxicab Commission 

Ordinance amending Sections 2.26.1 and 2.27.1 of the 
Police Code to amend the schedules for Motor Vehicles for 
Hire of the one-time permit application filing fees, other 
related fees and annual license fees and transferring 
responsibility for the administration the Motor Vehicles 
for Hire Program from the Police Department's Taxicab 
Detail to the Taxicab Commission. 

In November of 1998, San Francisco voters approved a 
Charter Amendment that created the Taxicab 
Commission (Proposition D) to administer the Motor 
Vehicles for Hire permits, fees and licensing program. 
Police Code Section 1076 (a) defines Motor Vehicles for 
Hire as every type, kind and class of privately owned 
motor-propelled passenger-carrying vehicles for hire over 
which the City may exercise jurisdiction, excluding 
vehicles licensed in other jurisdictions, limousines, 
funeral limousines, buses, private ambulances or rail 
vehicles. 



The proposed ordinance would (a) transfer responsibility 
for the administration the Motor Vehicles for Hire 
Program from the Police Department's Taxicab Detail to 
the Taxicab Commission in accordance with Charter 
Section 4.133; and (b) amend Sections 2.26.1 and 2.27.1 of 
the Police Code to modify the amount of the fees charged 
under the Motor Vehicles for Hire Program. The permit 
application filing fees are currently collected on a one- 
time basis only while other related fees are collected when 
applicable, for example each time a Medallion is lost, by 
the Police Department. The annual license fees are 
collected by the Treasurer/Tax Collector's Office. 

In accordance with Police Code Section 1087, all revenues 
generated from Motor Vehicles for Hire fees are deposited 
in the Taxicab Enforcement Fund and such funds can 
only be used for the capital and operating costs related to 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

31 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



the Motor Vehicles for Hire permit and license program. 
Capital costs include vehicles used for auditing and 
enforcement purposes and operating costs include 
personnel expenses, materials and supplies and related 
costs. All expenditures made from the Taxicab 
Enforcement Fund are subject to appropriation approval 
by the Board of Supervisors. 

As stated above, during the Budget Committee's 
consideration of the Taxicab Commission's proposed FY 
2002-2003 budget, an amended version of the proposed 
fee ordinance was submitted to the Budget Committee. 
The amended ordinance changed the proposed fees and, 
overall, reduced projected FY 2002-2003 fee revenue by 
$117,300, from $1,445,250 to $1,327,950. Also at that 
time, the Taxicab Commission's proposed FY 2002-2003 
expenditure budget of $1,445,250 was reduced by the 
Budget Committee by $117,300 to $1,327,950 to conform 
to the amended schedule of fees and reduced revenue 
estimate. Attachment I, provided by the Taxicab 
Commission, shows the current fees, previously proposed 
fees and currently proposed fees for 12 permit application 
filing fees and other related fees and eight annual license 
fees for Motor Vehicles for Hire. These fees were last 
revised in April of 1999 (File 98-1443). 

Attachment II, also provided by the Taxicab Commission, 
details the specific expenditure reductions to the Taxicab 
Commission's proposed FY 2002-2003 budget to reduce 
proposed expenditures by the $117,300 amount of the 
reduced revenues that would result from the amended 
version of the proposed ordinance. The Budget Committee 
approved the reductions to the Taxicab Commission's 
budget and recommended the reduced Taxicab 
Commission budget to the Board of Supervisors. 



Recommendations: Approve the proposed ordinance. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

32 



«.L LcLCIlIiieilL. 



Amended Proposed Taxi Fee Increase and Revenue Projections 
2002-2003 



6/27/02 







Original Proposed Fee 2002-2003 


New Proposed Fee 2002-2003 




Permit Type 


Current 
Fee 2002 


Original 
Proposed I 
Fee 2002- 
2003 


Original 

Proposed 

Fee vs. 

Current Fee 


% Increase 
Original 

Proposed 

Fee vs. 
Current Fee 


New 
Proposed 
Fee 2002- 

2003 


Original ., 
■_ . I New 
Proposed i _ 
_ ., Proposed 
Fee vs. New _ 
_ : Fee vs. 
Proposed _ 
1 ' Current Fee 
Fee • 


% Increase 

New 

Proposed 

vs. Current 

Fee 


2 

a 

> 

a 


Driver 
Applications 


S65 


$65 


$0 


0% 


$65! ■ S0 : SO 


0% 


Driver 
Renewals 


$40 


$40 


$0 


0% 


S45 


S5i $5 


13% 
















a 

re 
a 
E 


u 

a 

u 
i/i 

o 

■a 
o 

X 

B 

a 
a. 


Permit 
Holder 

Applications 


S450 


$550 


$100 


22% 


$550 


sol $100 


22% 


Permit 
Holder 
Renewals 


S330 


$625 


$295 


89% 


$475 


: ($150). 5145 


44% 














Ramped 
Taxicab 
Applications 


S325 


$100 


($225) 


-69% 


$100! $0 


($225) 


-69% 


Kampea 
Taxicab 
Renewals 


S175 


$100 


($75) 


-43% 


$100 


SO 


($75) 


-43% 














c 
re 
o 

"a 

Q. 

< 
< 


PCN 

Applications 


$200 


$225 


$25 


13% 


S300 


S75l $100 


50% 


n 

re 

- O 

E "g 

ai r - 

Q. 2 



I 


Color 

Scheme 

Change 


S125 


$150 


$25 


20% 


$250 


S100 


$125 


100% 


Lost 
Medallions 


S150 


$150 


$0 


0% 


$150 


SO 


$0 


0% 


Metal 
Medallions 


S25 


$25 


$0 


0% 


$30 


$5] $5 


20% 














U) 
0) 

'E 

IB 

a 
c 
5 
o 
n 
re 

u 


New Color Scheme Application 










1 to 5 

Medallions 


S50O 


$500; $0 


0% 


$750 


S25o| S250 


50% 


6 to 15 

Medallions 


$1,000 


$1,000 


$0 


0% 


$1,500 


S500 


S500 


50% 


16 to 49 

Medallions 


$2,000 


S2,OOo! $0 


0% 


$3,000 


S1.000= 51,000 


50% 


50 or more 
Medallions 


$2,500 


$2,500 


$0 


0% 


$3,750 


51,250 S1.250 


50% 
















Color Scheme Renewals 












1 to 5 
Medallions 


S500 


$500 $0 


0% 


$500 


so! so 


0% 


6 to 15 
Medallions 


$1,000 


si.ooo! $C 


0% 


$1,000 


so! $c 


0% 


16 to 49 
Medallions 


$2,O0C 


$2,00C 


$c 


0% 


$2,000 


so 


SC 


0% 


50 or more 
Medallions 


$2,50C 


$2,50C 


$c 


0% 


S2.50C 


so 


SC 


0% 




















re 
a 

in 
5 


Dispatch 

Service 

Application 


$2,50C 


S2.50C 


$c 


0% 


S2.50C 


sc 


SC 


0% 


Dispatch 

Service 

Renewals 


$2,50C 


S2.50C 


SC 


0°/< 


S2.50C 


SOj sc 


0% 




' Total 
Revenue 


$1,040,171 


S1,445,25( 


) $405,07! 




S1.329.25C 


($116,000) $289,07! 





33 



Attachment II 



Reductions to Taxicab Commission Budget 
Per New Proposed Fee Increase 6/27/02 

• Per further discussions regarding the Taxicab Commission Fee Increases, I am submitting an 
amended fee schedule with the following amendments to the Taxicab Commission budget. 

Reductions in the total of 31 1 7,300 Include: 

• .75 FTE of class 1 840, Junior Management Analyst in the amount of $41 ,085 

• .5 FTE of class 1 842, Management Analyst in the amount of $31 ,1 06 

• $17, 776 in corresponding fringes 

• $1 ,333 in Professional and Contract Services 

• $26,000 in equipment for 1 car 



■-_" : ^Salaries" V §£ 






w&Msmsm: 



Class 



FTE 



Reductions 



1840 



-0.75 



$ (41,085) 



1842 



-0.5 



$ (31,106) 



Subtotal 



(72,191) 



Fringe 



(17,776) 



r Total Salaryl&FringeM 



mmm: - ~ -- : 



£$^89j967)g 



Non-Salary 



Professional and Contract 



(1,333) 



Capital/ Equiptment 



S (26.000) 



:' Tota;rNdff : Salarg^ 



■:(2T-333)| 



Reduc\ibna^vingsM; : 



34 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

Item 5 - File 02-0483 



Department: 
Item: 

Description: 



Comments: 



Police Department 

Resolution authorizing the Police Department to donate 
one surplus van to the City of Concord's Police 
Department. 

According to Sergeant David Herrera of the Police 
Department, the subject police van, a 1987 Chevrolet 
Fleetwood motor home, has approximately 5,012 miles. 

According to Sergeant Herrera, and as explained in his 
attached memorandum (Attachment), this van was 
acquired by the Police Department at no cost in 1989 as a 
result of asset forfeiture through the Department's 
Narcotics Division. According to Sergeant Herrera, the 
van has been used by the Police Department as its sole 
mobile command platform during emergencies for the 
past 12 years, during planned and unplanned 
emergencies to establish an on-site control center. 

The Chief of Police of the City of Concord has requested 
that the van be donated to the City of Concord. According 
to Sergeant Herrera, the Concord Police Department 
plans to refurbish the van for use as a command post 
during emergency operations and as a community policing 
outreach vehicle. 

1. According to Sergeant Herrera, in October of 2001, the 
Police Department purchased one Police command van 
with FY 2000-2001 Mayor's Criminal Justice Council 
(MCJC) funds, which are funded through the U.S. 
Department of Justice Local Law Enforcement Block 
Grant Program and were previously approved by the 
Board of Supervisors. This van is now being used by the 
Police Department as a mobile command platform during 
emergencies. According to Sergeant Herrera, the Police 
Department also purchased one additional Police 
command van with FY 2001-2002 San Francisco Traffic 
Offenders Program (STOP) funds, which are self 
generating funds from revenue generated from traffic 
enforcement. This van is expected to be delivered to the 
Police Department in the Fall of 2002 and will also serve 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

as a mobile command platform during emergencies. 
According to Sergeant Herrera, the Police Department 
has no use for the subject police command van, which has 
not been used by the Police Department since October of 
2001 and is in need of extensive repairs. 

2. According to Sergeant Herrera, the estimated fair 
market value of the van is between $7,000 and $10,000, 
based on an evaluation by Nationwide Auction Systems, 
an independent appraiser retained by the Purchasing 
Division. The Police Department has determined that the 
van is surplus to the needs of the department and is 
awaiting the Board of Supervisors decision on whether or 
not the van will be donated to the City of Concord. 
According to Sergeant Herrera, once the Board of 
Supervisors has acted on this resolution, the Police 
Department will decommission the vehicle. On March 28, 
2002, the Police Commission approved a resolution 
authorizing the donation of the van to the City of Concord. 

3. According to Sergeant Herrera, if the van were not 
donated to the Concord Police Department, the van would 
be sold by the Purchasing Division's Central Shop at a 
public auction. However, as noted in the attached 
memorandum, Sergeant Herrera states that former Chief 
Lau is requesting that the van be donated to the Concord 
Police Department in support of the goals of the Multi- 
county Mutual Aid Response Program under which 
various law enforcement agencies provide assistance to 
one another. The San Francisco Police Department is a 
member of the nine Bay Area County's Multi-county 
Mutual Aid Response Program. 

Recommendation: Approval of the proposed resolution is a policy decision for 

the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

36 



Attachment 




FRED H. LAU 
CHIEF OF POUCH 



POLICE DEPARTMENT 

CITY AND COUNTY OF SAN FRANCISCO 

THOMAS J. CAHILL HALL OF JL'STIC: 
350 SRVANT STREET 

san FRANCisco. California 9mo3 



Apti' 1 1, 2002 



Mr Brian Storr 
Ct'fice cf the Budget Analyst 
1390 Market Screes, Room 1025 
Sin Frxnciseu, CA 9-1C3 

Dear Mr. Swrr, 

Per yo\;r request, I am responding to the questions related to the proposed donation of che police 
department' .^ surplus Command Van (161K601) to che Concord Police Department. The esnmared 
current value ot" rhls 1037 Fleetwood motor home is $7,000.00 to $10,000.00 it public auction. The 
Police Department Acquired this vehicle as a result of an asset forfeiture case dirough dn_- Narcotics 
Divis-.cn 3t no cost co die C:cy m eariy 1939. It has served die city as our sole mobile command 
phirfcirm for the pas; 12 years This vehicle was replaced in October ot'20Ql by a custom built state 
of the irr Mobile Command Van that wis mmuractuted specific to die needs of our department 

The cancio'nn of tins piece cf equipment con be described *• poor urbesr. Ir was never 
manufiiCrared 35 a mobile command platform net was ic designed ro navigate on steep city hill. These 
facturi nave lend ro die unreliable nature of die vehicle. Major electrical issues, fr.mic stress, engine 
oil leaks and compressor failure are only some of die many mechanical problems. Exterior roof leaks 
■ind sidmg fangue have made die vehicle less chin watertight 

The Chief of Police has asked fhlf this van be donated to die Concord Police Department ar the 
request ci Chief Ren Ace Chief Ace and Lie Concord Police Department participate in a multi- 
cuur.iy mutual aid response program designed ;o support various law enforcement agencies in the 
event of civic crisis. Ccncocd was pact of die mutual aid response foe the Ciry of San Francisco 
during die "White Nighr" nets many years *eo. They have a number of high profile targets within 
the Csocr.rti ciry Iimics as well as neighboring jurisdictions. Budgetary restraints hava force dieir 
deparmuit tu cperace annua ly without this valuable piece of equipment. They have inspected th.e 
van a.-.c art willing to accept it in an "as is*' condition. 

With ci.2 in mind, Gnef Fred H. Lau and che Honorable Members of tie Police Commission request 
your support in helping to make a portion of cur overall mutual a.d program stronger. Please feel 
free to contact m; a 553-1221 if I cm help vn any further way. 




Sergeant David ? Werrera 

FltM Admimsmmr 

S.m Francwcn Pnlice Debarment 



37 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

Item 6 -File 02-1237 



Department: 



Item: 



Services to be 
Performed: 



Description: 



District Attorney 

Resolution concurring with the Controller's certification 
that assistance to certain victims of crime and education 
in community anti-street violence can be practically 
performed for the District Attorney's Victim Witness 
Assistance Program by a private contract at a lower cost 
than similar work services performed by City and County 
employees. 

Victim Witness Services for the District Attorney's Victim 
Witness Assistance Program 

Charter Section 10.104 provides that the City may 
contract with private firms for services that can be 
practically performed for a lower cost than simdar work 
performed by City employees. 

Victim Witness Services for the District Attorney's Victim 
Witness Assistance Program consist of assisting lesbian, 
gay, bisexual, and transgender victims and witnesses in 
cooperating with the criminal justice system in 
prosecutions. 

The Controller has determined that contracting for Victim 
Witness Services for FY 2002-03 would result in 
estimated savings as follows: 





Lowest 


Highest 




Salary 


Salary 


Citv-Operated Service Costs 


Step 


Step 


Salaries 


$101,085 


$122,892 


Fringe Benefits 


28.519 


31.932' 


Total 


$129,604 


$154,824 


Contractual Services Cost 


(105.968) 


(107,589) 


Estimated Savings 


$23,636 


$47,235 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

38 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



Comments: 



1. A contract for Victim Witness Services was first 
certified under Proposition J as required by Charter 
Section 10.104 in 1981 and such services have been 
provided by an outside contractor, Community United 
Against Violence (CUAV), a non-profit corporation, since 
that time. According to Ms. Linda Alexander of the 
District Attorney's Office, since 1981 CUAV has been the 
sole contractor of Victim Witness Services for (a) 
assistance to lesbian, gay, bisexual, and transgender 
victims of crime and (b) hate-crime prevention services 
and therefore CUAV is uniquely qualified to provide such 
services. 



2. The Contractual Services Cost used for the purpose of 
the analysis is based on (a) CUAVs estimated FY 2002-03 
costs to provide victim witness services, and (b) the salary 
and fringe benefits of 0.1 FTE 8131 Victim Witness 
Investigator II position in the District Attorney's Office to 
monitor the contract. Ms. Alexander notes that FY 2002- 
03 would be the 21 st year that the City has contracted 
with CUAV for victim witness services. 



Recommendations: 



3. The prior one-year contract with CUAV, the non-profit 
organization which provides the victim witness services, 
expired on June 30, 2002. According to Ms. Alexander, 
CUAV has been performing victim witness services 
without a contract since July 1, 2002 because approval of 
the proposed resolution is required before the contract 
with CUAV can be renewed. As the contract period for the 
proposed resolution is July 1, 2002 through June 30, 
2003, the proposed resolution should be amended for 
retroactivity. According to Ms. Alexander, the proposed 
resolution is approximately one month late in coming 
before the Board of Supervisors due to administrative 
delays. 

4. The Attachment to this report, provided by the District 
Attorney's Office, is the Controller's supplemental 
questionnaire, with the responses from the District 
Attorney's Office. 

1. As noted in Comment No. 3, amend the proposed 
resolution to provide for retroactivity. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

39 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



2. Approve the proposed resolution, as amended. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

40 



Attachment 
Page 1 of 1 

CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 

DEPARTMENT: District Attorney's Office 

CONTRACT SERVICES: Community United Against Violence (CUAV) 

CONTRACT PERIOD: July 1 , 2002 thru June 30, 2003 



(1 ) Who performed the activity/service prior to contracting out? 
No on performed these services prior to CUAV. 



(2) How many City employees were laid off as a result of contracting out? 

There have not been and will not be any City employees laid off as a result of the contract. 



(3) Explain the disposition of employees if they were not laid off. 
N/A 



(4) What percentage of City employees' time is spent of services to be contracted out? 
N/A 



(5) How long have the services been contracted out? Is this likely to be a one-time or an ongoing request for 
contracting out? 

The services have been contracted out since 1981. This is an on-going contract with annual requests. 

(6) What was the first fiscal year for a Proposition J certification? Has it been certified for each subsequent 
year? 

The contract predates Proposition J. The contract has been certified each year since Proposition J 
passed. 

(/) How will the services meet the goals of your MBE/WBE Action Plan? 

CUAV is a 501 C 3 non-profit. I do not believe that it falls under MBE/WBE categories (as it is not 
"owned"). 50% of the Board are people of color. 

(8) Does the proposed contractor provide health insurance for its employees? 
Yes, CUAV provides health insurance for its employees. 

(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same benefits 
provided to employees with domestic partners? If not, how does the proposed contractor comply with the 
Domestic Partners ordinance? 

CUAV (the proposed contractor) complies with the Domestic Partnership ordinance, providing benefits to 
both spouses and domestic partners. 

(10) Does the proposed contractor pay meet the provisions of the Minimum Compensation Ordinance? 
Yes. 



Department Representative: Linda Alexander 
Telephone Number: (415)553-1827 



41 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

Item 7 - File 02-0794 

Note: This item was continued by the Finance Committee at its meeting of June 5, 
2002. 



Department: 
Item: 



Amount: 
Source of Funds: 

Description: 



Parking Authority 

Mayor's Office of Public Finance 

Resolution (1) approving the issuance of Parking Revenue 
Refunding Bonds by the San Francisco Ellis-O'Farrell 
Parking Corporation in an amount not to exceed 
$6,500,000, to refinance bonds issued in 1992 which 
funded the seismic upgrade and expansion of the Ellis- 
O'Farrell Public Parking Garage; (2) approving a bond 
indenture modifying the maximum amount of the 
Contingent Reserve Fund by 50 percent from $500,000 to 
$750,000; (3) authorizing and ratifying the execution and 
delivery of documents reasonably necessary for the 
issuance, sale and delivery of such refunding bonds; and 
(4) ratifying previous actions taken in connection 
therewith. 

Not to exceed $6,500,000 

San Francisco Ellis-O'Farrell Parking Corporation 
Parking Revenue Refunding Bonds 

According to Mr. Ron Szeto of the Department of Parking 
and Traffic (DPT), the City-owned Ellis-O'Farrell Public 
Parking Garage, located at 123 O'Farrell Street, is leased 
by the City to the San Francisco Ellis-O'Farrell Parking 
Corporation, a nonprofit corporation. Attachment I, 
provided by DPT, contains background information on the 
San Francisco Ellis-O'Farrell Parking Corporation and 
their existing lease agreement with the Chty. Mr. Szeto 
advises that, under the terms of the approximately 26- 
year lease between the City and the Corporation which 
began on June 1, 1991 and terminates on April 1, 2017 1 , 
the Corporation is required to obtain Board of Supervisors 
approval for the issuance of tax-exempt bonds and the 
execution of various documents related to such bonds. In 
1992, the Board of Supervisors authorized the 
Corporation to issue $6,500,000 in Parking Revenue 
Bonds to seismically upgrade the Ellis-O'Farrell Garage 



1 According to the terms of the lease between the City and the Corporation, the lease period began on 
June 1, 1991 and terminates on the earlier of 50 years (May 31, 2041) or the date of the last debt 
service payment (April 1, 2017). 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

42 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



and expand the Garage by adding approximately 350 
parking spaces on two and one-half additional parking 
levels. According to Ms. Nadia Sesay of the Mayor's 
Office of Public Finance, the outstanding principal 
amount of debt from the original 1992 $6,500,000 bond 
issuance is $5,225,000 as of May 20, 2002. 

Approval of the proposed resolution would authorize the 
San Francisco Ellis-O'Farrell Parking Corporation to 
issue tax-exempt Parking Revenue Refunding Bonds in an 
amount not to exceed $6,500,000, in order to refund the 
outstanding 1992 Parking Revenue Bonds. According to 
Mr. Szeto, these Parking Revenue Refunding Bonds 
would be repaid from the gross receipts of the Ellis- 
O'Farrell Garage. According to Mr. Szeto, these Parking 
Revenue Refunding Bonds, as with the original 1992 
Parking Revenue Bonds, do not require the City's General 
Fund to repay the bonds. 

According to Ms. Sesay, the existing 1992 Parking 
Revenue Bonds have interest rates of between 6.9 percent 
and 7.125 percent and were issued with a 25-year term, 
with a final payment date on April 1, 2017. The 1992 
Parking Revenue Bonds can be called from investors on or 
after April 1, 2002. According to Ms. Sesay, the estimated 
true interest cost for the subject proposed Parking 
Revenue Refunding Bonds is 4.89 percent and the bonds 
would have an approximately 15-year term with the final 
payment still due on April 1, 2017. Attachment II, 
provided by the Mayor's Office of Public Finance, is a debt 
service comparison between the 1992 Parking Revenue 
Bonds and the proposed Parking Revenue Refunding 
Bonds, and an explanation of the one-time versus the 15- 
year aspects of the savings. 

As shown in Attachment II, the proposed refinancing of 
the 1992 Parking Revenue Bonds will result in an 
estimated total savings in aggregate debt service of 
$430,043.61, of which $428,000 would be realized on the 
anticipated issue date of September 10, 2002 as a one- 
time upfront savings plus $2,043.61 in net present value 
savings over the 15-year term of the bonds. This 
estimated savings is based on a par amount of $5,225,000 
(the outstanding principal amount of debt on the original 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

43 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

1992 bonds) at an average annual interest rate of 4.89 
percent for a term of 15 years, according to Ms. Sesay. 

According to the terms of the existing indenture between 
the Corporation and the Bank of America National Trust 
and Savings Association for the 1992 Parking Revenue 
Bonds, the Corporation retains 15 percent up to $500,000 
maximum of net annual revenues 2 from the operation of 
the Ellis-O'Farrell Garage in a Contingent Reserve Fund 
to be used only for Garage capital improvements. The 
proposed resolution would approve an indenture between 
the Corporation and the Trustee of the proposed 
Refunding Bonds, to be selected in August of 2002 
through a competitive bid process, to increase the 
maximum amount net revenues that the Corporation 
retains in the Contingent Reserve Fund by 50 percent 
from $500,000 to $750,000. According to the terms of the 
proposed indenture, whenever any funds are withdrawn 
for capital improvements from the Contingent Reserve 
Fund, the amount withdrawn would be replaced from 
subsequent net revenues up to $750,000. However, the 
Contingent Reserve Fund could not be allocated an 
amount in excess of 15 percent of the Garage's net 
revenues in any one year. According to Mr. Szeto, 
increasing the maximum amount of the Contingent 
Reserve Fund by 50 percent is necessary to allow the 
Corporation to set aside sufficient funds to address 
needed capital improvements including office renovations, 
the purchase of digital cameras for the vehicle entry lanes 
and stairwells, and other necessary improvements. 

Attachment III, provided by DPT, shows the actual and 
projected sources and uses of Ellis-O'Farrell Garage 
revenues from 1999 to 2017 (year ending April 30 th ). As 
shown in Attachment III, in 2003 the Corporation would 
retain in the Contingent Reserve Fund the estimated one- 
time savings of $428,000 from issuance of the proposed 
Parking Revenue Refunding Bonds, resulting in a 
Contingent Reserve Fund total of $467,925 in 2003 (year 
ending April 30 th ). According to the projections contained 
in Attachment III, at no time during the 15-year term of 



2 Net revenues are equal to gross receipts less Parking Taxes, operating expenses and annual debt 
service. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

44 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

the proposed Parking Revenue Refunding Bonds does the 
Contingent Reserve Fund total more than $467,925. 
Therefore, the Budget Analyst questions the need to 
increase the maximum amount of net revenues that the 
Corporation retains in the Contingent Reserve Fund by 
50 percent, from $500,000 to $750,000, as is proposed in 
the new indenture for the subject Parking Revenue 
Refunding Bonds. Mr. Szeto responds in Attachment IV to 
the Budget Analyst's point by stating "There is always the 
possibility that the planned capital work for 2003 and 
subsequent years may not start or be completed exactly as 
scheduled within the Corporation's fiscal year. For this 
reason and the real possibility that the economy and the 
garage revenues will recover in the near future, the 
proposed Contingent Reserve Fund maximum limit of 
$750,000 will insure the availability of needed capital 
improvement funds without imposing a use or lose 
situation that does not have a negative financial impact to 
the City." 

According to Mr. Szeto, the Parking and Traffic 
Commission must approve capital improvement 
expenditures from the Contingent Reserve Fund, which 
are incurred by the San Francisco Ellis-O'Farrell Parking 
Corporation. Mr. Szeto reports that such expenditures are 
not subject to Board of Supervisors approval. 

Comments: 1. According to Ms. Sesay, the principal that would be 

outstanding on the prior 1992 Parking Revenue Bonds 
will be $5,225,000 on the date that the 1992 Parking 
Revenue Bonds are called, which is anticipated to be on 
October 14, 2002. The prior 1992 Parking Revenue Bonds 
have a Debt Service Reserve Fund which has a current 
balance of approximately $585,693. Those monies from 
the Debt Service Reserve Fund would be released when 
the 1992 Parking Revenue Bonds are defeased. 3 According 
to Ms. Sesay, approximately $565,940 of the $585,693 
Debt Service Reserve Fund would be used to fund a new 
Debt Service Reserve Fund 4 for the proposed refunding 



3 Defeasance is the term used to describe the termination of all rights and interests of the 
bondholders upon final payment of all debt service, in the manner required by the terms and 
conditions of the bond resolution. 

4 Under the terms of the proposed refunding bond issuance and in accordance with Internal Revenue 
Service (IRS) Tax Regulations, the Corporation is required to fund a Debt Service Reserve Fund in 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

45 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

bonds. According to Ms. Sesay, the balance of $19,753 
($585,693 less $565,940) would be allocated to an Escrow 
Fund for use in paying off the 1992 Parking Revenue 
Bonds. Ms. Sesay advises that a Debt Service Reserve 
Fund is required to provide for debt service payments in 
case of a funding shortfall. If a shortfall occurs, and the 
Trustee is required to pay debt service from this Reserve 
Fund, then the Reserve Fund would be replenished by 
Garage revenues. 

2. According to Ms. Sesay, the proceeds deposited in the 
Escrow Fund from the anticipated September 10, 2002 
sale of the subject Parking Revenue Refunding Bonds will 
be held by a third party trustee (the "Escrow Agent") to be 
selected through a competitive bid process in August of 
2002. On the anticipated bond call date of October 14, 
2002, the Escrow Agent will redeem the 1992 Parking 
Revenue Bonds with the monies held in the Escrow Fund. 

3. According to Ms. Sesay, the cost of issuance is 
estimated to be $250,000 for the proposed refunding 
bonds. Ms. Sesay reports that the cost of issuance is to be 
paid with bond proceeds. 

4. Ms. Sesay anticipates that the proceeds from the sale 
of the subject Refunding Bonds will be invested in State 
and Local Government securities until October 14, 2002, 
the anticipated call date for the 1992 Parking Revenue 
Bonds. 

5. Ms. Sesay notes that the exact amount of the proposed 
Parking Revenue Refunding Bond issuance in an amount 
not to exceed $6,500,000, will not be known until the date 
of the sale of the Parking Revenue Refunding Bonds, as 
the interest rate will affect the aggregate principal 
amount needed to fund the refunding escrow account and 
the bond insurance. However, Ms. Sesay advises that it is 
standard industry practice that issuance of refunding 
bonds must result in a debt service savings of at least 



the amount equal to the lesser of 10 percent of the par amount of the proposed Refunding Bonds, 100 
percent maximum annual debt service or 125 percent average annual debt service on the proposed 
Refunding Bonds. In this case, the amount of the Debt Service Reserve Fund is an amount equal to 
100 percent maximum annual debt service on the proposed Refunding Bonds or approximately 
$565,940. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

46 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

three percent of the bonds to be refunded, which in this 
case, for the original 1992 bonds, is $5,225,000. Therefore, 
in order to assure debt service savings of at least three 
percent, the Budget Analyst recommends that the 
proposed resolution be amended by adding the following 
provision: 

"further provided, that the par amount of the 
refunding bonds issued shall not exceed an 
amount that will produce a net present value 
debt service savings of at least three percent 
of the refunded amount of $5,225,000 to 
defease the Series 1992 Bonds, or $156,750 
as certified by the Corporation's independent 
financial advisor as a pre-condition to the 
Corporation's delivery of the Parking 
Revenue Refunding Bonds to the Trustee." 

Ms. Sesay concurs with the Budget Analyst's 
recommendation. 

6. According to Ms. Theresa Alvarez of the City 
Attorney's Office's, although the proposed resolution 
includes a provision to ratify previous actions taken in 
connection with the issuance of the proposed Parking 
Revenue Refunding Bonds, Ms. Alvarez is not aware of 
any such actions that have been taken. 

7. At its meeting of June 5, 2002, the Finance Committee 
requested DPT to evaluate the potential for having the 
City defease the existing bonds and dissolve the San 
Francisco Ellis-O'Farrell Parking Corporation. 
Attachment V, provided by Mr. Szeto, is a memorandum 
in response to the Committee's request. Attachment VI is 
a memorandum from Mr. Michael Martin of the City 
Attorney's Office's commenting on this matter. 

Recommendations: 1. In accordance with Comment No. 5 above, amend the 

proposed resolution to require that the par amount of the 
Parking Revenue Refunding Bonds to be issued by the 
San Francisco Ellis-O'Farrell Parking Corporation shall 
not exceed an amount that will produce a net present 
value debt service savings of less than three percent of the 
$5,225,000 which is the outstanding balance of the 1992 
bonds to be refunded. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

47 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 



2. As noted in the Description Section above, the Budget 
Analyst questions the need to increase the maximum 
amount of net revenues that the Corporation retains in 
the Contingent Reserve Fund by 50 percent, from 
$500,000 to $750,000, as is proposed in the new indenture 
for the subject Parking Revenue Refunding Bonds, 
because at no time during the 15-year term of the 
proposed Parking Revenue Refunding Bonds does the 
Contingent Reserve Fund total more than $467,925 
according to the projections contained in Attachment III. 

3. Approval of the proposed resolution, as amended, is a 
policy decision for the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

48 



=C.-1 : PAFKING AUTHCRITY 



SAM FRANCISCO 



: H7JNE rO. 



Pag? 1 of 3 
City and County of San Francisco 




DEPARTMENT OF PARKIKC i TRAFFIC 




WILLIE LEWIS BROWN. JR.. Mayor 

FRED M. HAMDUN, EXECUTIVE DIRECTOR 

RONALD SZE70, ACTING DIRECTOR. PARKING AUTHORITY 



MEMORANDUM 



DATE: 
TO: 

FROM: 



May 22, 2002 



Ms. Anna LaForte 

Analyst 

Budget Analyst's Office 

Ronald Szeto P<S 
Acting Director ' 
Parking Authority 



SUBJECT: City of San Francisco Ellis-OTarrell Parking Corporation Refunding 
Bonds 



Background: 

In 1991, the Board of Supervisors approved a Lease, dated as of June I, 1991, (the 
"Lease") between the City and County of San Francisco (die "City") and the City of San 
Francisco Ellis O'Farrell Parking Corporation (the "Corporation") for the management of 
the Ellis O'Farrell Garage (the "Garage"). Under the terms of the Lease, the Corporation is 
required to obtain City approval for the issuance of tax-exempt bonds and the execution of 
various documents relating thereto. 

Also under the terms of the Lease, the Corporation is required to solicit a professional 
parking operator through a competitive process for the daily parking management of the 
Garage and to obtain the Parking and Traffic Commission authorization to execute a 
management agreement between the Corporation and the parking operator. The 
Corporation is also required to submit an annual operating budget to the Parking and 
Traffic Commission for review and to the Controller's Office for approval. Furthermore, 
the Corporation is required to obtain the Parking and Traffic Commission authorization to 
expend funds for capital improvements to the Garage. 

In 1992. the Corporation issued Parking Revenue 3onds the ("Series 1992 Bonds") to 

seismically upgrade the Garage damaged by the Loma Prieta Earthquake and to expand 
the Garage by adding approximately 350 spaces on two and one-half additional parking 
levels. 



15) SSi-PARK FAX (415) SS4-9E34 



25 Van Nocc Avonue, Sullo 410 

49 



San Francisco, CA 94i:;-4S76 



.rage z or j 
-=: • : PARKING fiUTHGRITY PHCrc NC. : 55-J 5355 



Ms. Anna LsFone 
May 22, 2002 
Paae 2 of 3 



As of May 1, 2002, the Corporation had an outstanding principal amount of S5, 225, 000 
of Series 1 992 Bonds. Final maturity on the Parking Revenue Bonds is April 1 . 201 7. 
Interest rates range from 6.90% to 7.125% (the weighted average interest rate is 7.12%) 
and the annual payment is approximately S580.000. 

Under the Indenture, dated as of January 1, 1992, between the Corporation and the Bank 
of America National Trust and Savings Association, as trustee, (the "Indenture"), capital 
improvements at die Garage are funded from the Corporation's Contingent Reserve Fund 
("Capital Improvement Fund")- Over the past several years, the Corporation has depleted 
all of the available funds in the Capital Improvement Fund on needed capital 
improvements at the Garage. In some instances our Department and the Controller's 
Office have had to utilize the Corporation's Repair and Replacement Fund to pay for 
needed capital projects. The Repair and Replacement Fund is not intended for this 
purpose. 

Pursuant to the Indenture, the Corporation retains 15% (up to $500,000 maximum) of 
"Net" revenues from the operations of the Garage to be used for capital improvements. 
For fiscal year 2001-2002, the Corporation projects less than $40,000 of allocated "Net" 
revenue will be available to augment the Capital Improvement Fund. 

One of our goals in the refunding process is to determine a proper net revenue allocation 
for the Capital Improvement Fund. 

Propoga]; 

Staff and the Corporation propose to authorize the Corporation to take advantage of 
lower interest rates by issuing refunding bonds and to apply/deposit most of the "Net" 
savings, after payments of the cost of issuance which shall total approximately S250.000 
into the Capital Improvement Fund. Based upon current market conditions as of May 1, 
2002, it is estimated that the deporit to the Capital Improvement Fund would be 
approximately $500,000. If rates were to increase 25 basis points, the amount available 
to deposit would be approximately S-153,000. 

Originally, we also proposed adjusting the net revenue allocation from 15% to 25% to 
provide needed funding into the Capital Improvement Fund and increasing the maximum 
amount of the Capital Improvement Fund from 2500.000 to $2,000,000. 



50 



Pag e 3 of 3 
PARKING flUTHCRITY PHOME MO. : 534 5-35 



Ms. Anna LaForte 
May 22, 2002 
Pace 3 of 3 



MUNI supports the Corporation's request to deposit the "Net" savings from the refunding 
into the Capital Improvement Account and agreed to further assist the Corporation by 
increasing the maximum limit from $500,000 to 5750,000. However, at this time, MUNI 
does not support the extra 10% net revenue allocation to the Capital Improvement Fund. 
Hopefully, as the economy improves, the Corporation could generate higher net revenues 
and begin to adequately replenish the Capita! Improvement Fund. Furthermore, MUNI 
agreed to revisit the Corporation's capital needs in die future if necessary. !n the 
meantime, the Corporation could use the cash saving from the refunding to address their 
capital needs for the next several years. 

The Corporation is being assisted in this bond refunding by a team of individuals 
representing: the Department of Parking and Traffic, the Mayor's Office of Public 
Finance, the City Attorney's Office, Co-Bond Counsels (Orrick, Harrington & Sutcliffe 
and Lofton and Jennings). Co-Financial Advisors (Public Financial Management and 
Municipal Capital Management), and Corporation Counsel (Mr. Richard Dole). 

As of May 1, 2002, the refunding team estimates a True Interest Cost (TIC) of (4.63% 
based on present market condition and S500.000 available from the capital improvement 
account. The final maturity of the bonds would not be extended beyond the term of the 
Series 1992 Bonds, which is April 1, 2017. 

The cost of issuance of the refunding bonds is estimated at (S250.000). However, the 
Corporation would not be obligated for any significant amount should the market 
conditions change unfavorably and the refunding bonds are not issued. 

The Department recommends adoption of the proposed Resolution. 



Cc: Diana Hammons. DPT 



*PAlUaNOG«raj|etf Ellu OF:rrcll Gin^e-Budgel A:ily5t ir.cno lor rc:\.rJin; bondc doc 

51 



Page 1 of 3 



SOURCES AND USES Or FUNDS 

Eli;s-OFarrelI Parking Corporation 

2002 Refunding of Series 1992 

Current Market Raics u of May 7, 2002 Plus 25 Basis Points 

Contingency Fund 



Sou\r::s: 



Bond Proceeds: 

Par Amount 5,980.000.00 

Other Sources of Funds: 

Bond Funds 373.Oi6.00 

DSRF 5S5.693.42 

Repair ar.d Replacement Fund IOQ.000.00 

858.7J9.42 

6,538.739.42 



Uses: 

Project Fund Depoiits: 

Contingent Reserve 428,000.00 

Refunding Escrow Deposits: 

Cash Deposit 0.66 

SLG Purchases 5.454.126.00 

5,454.126.66 

Other Fund Deposits: 

Dent Service Reserve Fund 565.939.99 

Repair ted Replacement Fund 100.000.00 

665,939.99 

Delivery Dili Expenses: 

Cost of Issuesee 250.000.00 

Underwriter's Discount 38.870 00 

2SE.870.00 

Other Uses of Funds: 

Additional Proceeds J. 802.77 

6, £38.739 42 



Note: Run with A Scale Plus 25 Essis Points and no Insurance Cc 



May 9.2002 9:53 am Prepared by Public Rnaacal Maaageaect lne 

52 
MPY-21-2902 13=41 ,,, — .,-., 



Page 2 of 3 



savings 

EUij-OTaneU Parking Corporation 

2 °02 Refunding of Series 1992 
Curreru Mantel Raty aj ofMBy 7, 2002 Plus 25 Basis 
CoritJrigcncy fmd 



iii: Points 



Date 



04/01/2003 
cwoioooi 

04/01/2005 

04/01/2006 

04/01/2007 

04/0I/200E 

0470 1/2009 

04/01/2010 

04/01/2011 

04/01/20:2 

04/01/2013 

04/01/2014 

04/01/2015 

04/01/2016 

04/01/2017 



Prior 
Debt Service 



576,820.00 

S77.675.00 

577,000 00 

5E0.25fi.26 

577.087.50 

S77.SS0 00 

577.1B7.50 

550, 100.00 

576,231.26 

530,937.50 

578,506.26 

579.293.76 

577.943.76 

579,456.16 

576,475.00 



Refunding 
Debt Service 



565,939.99 
5S9.515-S0 
560.7C2.00 
560.272.50 
558,4^2.50 

560.344.00 

560.714.00 

564,727.00 

557.209.50 

563.842.00 

55S.850.DO 

562.578.50 

559,486.50 

559.814 50 

558.302.00 



svinp 



10.880.01 

U.IS9.50 

16.238.00 

19.983.76 

18.645.00 

17.506.00 

16.473.50 

15.373.00 

19.021.76 

17,095.50 

19,656.26 

16.715.26 

18,457.26 

29,641.76 

20.173.00 



Present Value 

to 07/10/2002 

@ 4.7913607% 



13.4-U.67 
17.874.02 

15,285.66 
17.656.05 
15,703.45 
2 4.057.37 
12,603.60 
11,206.87 
1 3.052.24 
1US0.83 
12.151.23 
9,846.63 
10.290.75 
10.378.17 
10.106.29 




Sa^ir.r; Sua q w v 



PV of savings froro ctsh Dow 
Less: Prior funds on hand 
Pies: Rcftuidin^ funds on hand 

Ks: PV Sav,ng S 
Upfront Savings 



Total So 



vings 



;54.g43.D4 
-E58, 739.42 
665.939.99 



430, DO. 51 



ith A Stale J»| UJ 2 5 Buij Po,n U and no In . 



uranc- Cost 



5:53 am Prepsred by Public Fi 



niL-ida) Majisjtn-.m:. Inc. 



53 



Pafc3 

TOTAL P.Z2 



Office of the Mayor 
san francisco 




Page 3 of 3 
Willie Lewis Brown, Jr. 



May 29, 2002 



TO: 



FROM: 



Anna LaForte 
Budget Analyst 

Nadia Sesay 
Public Finance 



RE: 



Up-front Savings VS Level Savings 



We typically structure bonds so that there is level debt service. Therefore, when we 
structure a refunding, it is structured for level savings, which means that debt service 
remains level but is lower. In this case, we have decided to structure the savings so 
that it is realized up front and the debt service over the remaining life of the bonds 
would remain unchanged (or reduced very slightly). Both types of structures would 
result in similar present value savings. In the first case, each year's savings would be 
discounted to the closing date to give you the present value savings. In the second 
case, the savings are already essentially discounted because they are realized on the 
closing day. 



1 DR. CARLTON B. GOODLETT PLACE, ROOM 200, SAN FRANCISCO, CALIFORNIA 94102 

(415) 554-6141 
RECYCLED PAPER 

54 



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MAY. -29 Q2lntU] 1 b : 22 HIT k w ur a. r. rrtiuu™ utr 



n r r a n c i a c o 



City and County of San Francisco 




DEP*RTue>rr or pabk:no t tra.'hc 




WILLIE LEWIS BROWN, JR.. Mayor 

FRED M. hAMDUN. EXECUTIVE DIRECTOR 

RONALO S2ETO. ACTING DIRECTOR, PARKING AUTHORITY 

MEMORANDUM 

DATE: _^ May 29. 2002 

TO: Anna LaFonc 

Analyst 
Budget Analyst's Office 

FROM: Ronald Szeto P_£ 

Acting Director 
Parking Authority 

SUBJECT: City of San Francisco Ellis-O'Farrell Parking Corporation Refunding 
Bonds (memo 2) 



in the past years, the Corporation had extensive work done at the Garage that costs over 
SI .5 million, which was well over the amount of funds and the maximum limit of the 
Contingent Reserve Funds. Our Department and the Controller's were able to assist the 
Corporation with the needed repairs by utilizing another fund. However, the Contingent 
Reserve Fund is the fund established and the more appropriate funding source for this 
type of work. At this time, the Corporation has depleted the funds in the Contingent 
Reserve Fund. 

Originally, we recommended applying/depositing the cash saving from the refunding into 
the Contingent Reserve Fund, increasing the maximum amount of the from 5500,000 to 
52,000, 000 and the allocation of net revenues from 15% to 25%. However, after 
discussions with Muni, we agreed thai the most beneficial proposal is to apply/deposit the 
cash saving from the refunding into the Contingent Reserve Fund for needed 
improvements and to increase the maximum amount from S500,000 to S750,000 to give 
the Corporation the opportunity to retain all of the cash savings from the refunding and to 
retain a higher maximum if revenue increases in the future. 

Upon refunding the bonds and depositing the cash savings, the Corporation's Contingent 
Reserve Fund will closely approach the current maximum limit of $500,000. There is 
always the possibility thai the planned capital work for 2003 and subsequent years may 
not start or be completed exactly as scheduled within the Corporation's fiscal year. For 
this reason and the real possibility that the economy and the garage revenues will recover 
in the near future, the proposed Contingent Reserve Fund maximum limit of S750.000 
will insure the availubility of needed capital improvement funds without imposing a use 
or lose situation that does not have a negative financial impact to the City. 



(415) 554-PARK FAX(41S) SM-9e34 



25 Van Nesg Avenue. Suite 410 

56 



San Francisco, CA 



UL -24' 02 (WED) 11 = 16 CITY k CO OF S. F. PARKING DEPT TEL: 415 554 9854 Attachment V 

rage 1 of 2 

City and County of San Francisco 



I AN FFANCIBCO 




lEPARTMEHT DF PARKING 4 TRAFFIC 



/ILLIE LEWIS BROWN, JR., Mayor 

RED M- HAMDUN, EXECUTIVE DIRECTOR 

ONALD S2ET0, ACTING DIRECTOR, PARKING AUTHORITY 

MEMORANDUM 

Date: July 24, 2002 

To: AnnaLaForte 
Budget Analyst 
Office of the Budget Analyst 

From: Ronald Szeto f-^S" 

Acting Director, Parking Authority 
Department of Parking and Traffic 

Re: EUis-Q'Fsrrell Refunding Bonds 




The purpose of this memorandum is to provide you with information on the status of the 
concerns raised at the June 5, 2002 Finance Committee when the Ellis-O'Farrell 
Refunding Bonds item was continued at the call of the Chair. 

At the June 5 th meeting, the Finance Committee asked City staff to look into the 
possibility of using another financing vehicle to defease the outstanding bonds of the 
Ellis-O'Farrell Garage and dissolve the City of San Francisco Ellis-O'Farrell Parking 
Corporation because tbe Corporation appeared to be fiscally irresponsible. The Finance 
Committee was concerned by the fact that the Corporation, experiencing a lost in the last 
six months, still had not secured any agreement or potential revenue by renting, leasing or 
licensing the 121 O'Farrell Street commercial space to the small business owners already 
occupying space. 

Also, at the meeting, I informed the Finance Committee that the Department of Parking 
and Traffic was planning to license the commercial space directly from the Corporation. 
This plan would have allowed the Department the ability to assist the small business 
owners while generating rental income for the Garage. The Finunce Committee said the 
Corporation has 90 days to heal any wounds. 



57 



JUL -24"02(WED) 11 = 16 CITY & CO OF S. F. PARKING DEPT TEL: 4 1 5 554 9 8 3 4 :|ttachmentV 

rage z or z 



Ms. Anna LaForle 
July 24, 2002 
Page 2 of 2 



Subsequently, the Corporation went beyond the Department's original plan by renting the 
display booths from the previous primary leasee, hired the security firm to protect the 
small business owners, hired a janitorial firm to maintain the premises, and directly 
contracted with the small business owners for the interim period, until a permanent lease 
is awarded. Moreover, the Corporation rolled-back the rental fees to the original amount 
paid by the small business owners at the 121 O'Farrell space while reducing the rent for 
the 133 O'Farrell merchants to provide a fair a competitive environment. 

The Corporation also instructed their broker to accept proposals Tor the 121 O'Farrell 
space until July 3 1 to provide the small business owners sufficient time to prepare and 
submit proposals and hire an outside evalualor to participate in the permanent proposal 
evaluation process. The evaluation process incorporates a 10% credit for local business. 

The Corporation will continue to directly license with each small business owner until the 
permanent leasee is identified, approved by the City, and ready for occupancy, 

Since the Corporation implemented a plan that generates revenue and accommodates the 
small business owners to the satisfaction of every party involved, the Department of 
Parking and Traffic recommends taking action on the Ellis-O'Farrell Refunding Bonds as 
originally submitted. 



\NDPT-AUM|N.2|5VR\nATA\PARKINfi\»Md U Dl AndlyiUEIl.ti.O'Forrall Rending Honda, up*. »» Anna UForle Jo 

58 



City and County of San Francisco 



Dennis J. Herrera 
City Attorney 




Attachment VI 

Office of the City Attorney 

Michael J. Martin 
Deputy City Attorney 

Direct Dial: [415)554-4648 

E-Mail: michael.martin@sfgov.org 



MEMORANDUM 
PRIVILEGED & CONFIDENTIAL 



TO: 


Anna LaForte 




Budget Analyst's Office 


FROM: 


Michael Martin 




Deputy City Attorney 


DATE: 


July 25, 2002 


RE: 


City of San Francisco Ellis-OTarrell Parking Corporation 



This memorandum has been created in response to a inquiry from the Budget Analyst's 
office relating to the proposed refinancing of the City of San Francisco Ellis-OTarrell Parking 
Corporation Parking Revenue Bonds, Series 1992 (the "1992 Bonds"), as to whether the City 
could directly prepay and defease the 1992 Bonds in the absence of any default by the City of 
San Francisco Ellis-O'Farrell Parking Corporation (the "Corporation"). 

The indenture relating to the 1992 Bonds does not reserve to the City the right to prepay 
the 1992 Bonds. Therefore, even if the City deposited with the trustee amounts sufficient to 
defease the 1992 Bonds, the trustee would not be able to defease the 1992 Bonds and discharge 
the indenture without the approval of the Corporation. 



59 



City Hall- 1 Dr. Carlton B. Goodlett Place, Room 234- San Francisco. California 94102-0917 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

Item 8 - File 02-0663 

Note: According to Mr. Ron Szeto of the Department of Parking and Traffic (DPT), 
the Department intends to submit an Amendment of the Whole to substitute 
the Municipal Transportation Agency Board of Directors for the Parking and 
Traffic Commission because, as of July 1, 2002, the DPT budget became part 
of the Municipal Transportation Agency's baseline budget and the DPT now 
reports to the Municipal Transportation Agency Board of Directors instead of 
to the Parking and Traffic Commission. 



Department: 



Item: 



Department of Parking and Traffic (DPT) 

Ordinance amending Section 17.11(a) of the San 
Francisco Administrative Code to extend the 
authorization of the Parking Authority and Parking and 
Traffic Commission to utilize a Bid/Request for Proposal 
(RFP) process for the awarding of all leases and 
management agreements for the use or operation of City- 
owned parking facilities by five years from June 1, 2002 to 
June 1, 2007. 



Description: 



On April 26, 1999, the Board of Supervisors approved an 
ordinance to amend Section 17.11 of the Administrative 
Code to (1) remove the prior provision requiring that the 
DPT obtain Board of Supervisors approval prior to 
advertising bid or Bid/RFP documents pertaining to the 
awarding of leases and management agreements to 
parking operators for the operation of parking facilities, 
and (2) authorizing the DPT until December 1, 2000 to 
issue Bid/RFPs in lieu of utilizing formal competitive 
bidding procedures for awarding leases and management 
agreements to parking operators for City-owned parking 
facilities (File 98-1935). Specifically, Section 17.11(a) of 
the Administrative Code enabled DPT to issue Bid/RFP's 
to award leases and management agreements to parking 
operators for operation of City-owned parking facilities 
when the Parking and Traffic Commission determines 
that such a Bid/RFP process is in the best interest of the 
City. In January of 2001, the Board of Supervisors 
approved an ordinance to extend the sunset provision for 
use of the Bid/RFP process by 18 months, from December 
1, 2000 to June 1, 2002 (File 00-1798). 



Board of Supervisors 
Budget Analyst 

SO 



Memo to Finance Committee 

July 31, 2002 Finance Committee Meeting 

The current provisions of the Administrative Code state 
that "the authority given to the Parking Authority to use 
a Bid/RFP Process shall sunset on June 1, 2002, unless 
the Board of Supervisors, by ordinance, continues this 
authorization." Additionally, the current ordinance states 
that "the Bid/RFP Process shall be reviewed by the 
Parking Authority to determine if the utilization of the 
Bid/RFP Process has been in the best interest of the 
public, and a report shall be submitted to the Board of 
Supervisors." As stated by Mr. Szeto in the attached 
memorandum (Attachment I, page 2), there are 
advantages and disadvantages for both the formal 
competitive bidding process and the Bid/RFP processes. 
Mr. Szeto states that "While the short-term effects of the 
Bid/RFP have thus far demonstrated positive results, we 
are requesting extension of the authorization to use a 
Bid/RFP process until June 1, 2007 to evaluate the long- 
term effects... After this proposed extension period, ending 
June 1, 2007, we should have sufficient data to fully 
determine the degree of success of the Bid/RFP process 
and its effectiveness in achieving desired end results that 
are truly 'in the best interest of the City.'" 

The proposed ordinance would amend Section 17.11(a) of 
the Administrative Code to extend the current sunset 
date by an additional five years, from June 1, 2002 to 
June 1, 2007 in order to permit the DPT to continue to 
award parking operator agreements on the basis of a 
Bid/RFP process rather than on the basis of utilizing 
formal competitive bidding procedures. 

Comments: 1. On April 16, 2002, the Parking and Traffic 

Commission approved a resolution determining that 
utilization of the Bid/RFP process has been in the best 
interest of the public. Mr. Szeto advises that Attachment I 
to this report is the required report on the Bid/RFP 
process, which under the existing provisions of 
Administrative Code Section 17.11(a), must be submitted 
by DPT to the Board of Supervisors. As stated by Mr. 
Szeto on page 2 of Attachment I, "The objective of 
utilizing the Bid/RF